Following the company’s third quarter financials, Echelon Wealth Partners analyst Rob Goff has cut his price target on D-Box Technologies (D-Box Technologies Stock Quote, Chart TSX:DBO).
On February 14, D-Box reported its Q3, 2018 results. The company lost $177,000 on revenue of $8.3-million, a topline that was down 21 per cent from the same period a year prior.
“Despite the quarterly drop in box office revenues in the theatrical market, we have succeeded in improving our year-to-date adjusted EBITDA,” says Claude McMaster, chief executive officer of D-Box. “We have also increased the number of the company’s integrator partners for the commercial entertainment division.”
In a reseach update to clients today, Goff maintained his “Speculative Buy” rating, but lowered his one-year price target on the D-Box Technologies from $.50 to $.35, implying a return of 119 per cent at the time of publication. The analyst explained the reasoning behind his target reduction.
“Our PT reduction reflects forecast reductions and considers the current tough environment for small cap stocks where overall valuations are under pressure and near-term financial momentum is an imperative,” Goff said. “Our revised PT reflects baseline forecasts leaving aside upside associated with potential contract wins or strategic partnerships about longer-term VR or home entertainment. While the Company deserves credit for its financial discipline as it manages growth investments to maintain positive EBITDA, we look for stronger revenue momentum to be rewarded by a coincident positive revaluation.
Goff thinks DBO will post Adjusted EBITDA of $2.0-million on revenue of $35.6-million in fiscal 2019.
“We maintain our bullish view on DBOX,” the analyst adds. “We have lowered our one-year PT from $0.50 to $0.35 based on the slower growth in new screen additions and drop in box-office tickets
sold (~$300M less in FQ319 vs. FQ318). This decline will slow down DBOX’s growth in the coming quarters. To remain on the cautionary side, we continue to await greater traction in N. America where we track its penetration of chains, theatre screens, and the size of in theatre deployments. We are encouraged the more than 10% of simulation & training revenues and the themed Entertainment sales involve VR applications.”