WOW Unlimited is “significantly undervalued”, says Echelon Wealth Partners

The strengthening of its management team has Echelon Wealth Partners analyst Rob Goff feeling confident about his bullish target on Wow Unlimited Media (Wow Unlimited Media Stock Quote, Chart TSXV:WOW).

On February 6, WOW announced that former Dreamworks EVP Mark Taylor had joined its team as Consulting Executive Producer and head of Studio Partnerships.

“Mark is a stellar and widely admired force in the animation world, so we are very pleased to have him join our dedicated team at WOW!. We are confident that his talents align seamlessly with our mission and vision for our company as we look to reshape the future of the animation content landscape,” said Michael Hefferon, Executive Vice President of WOW! Unlimited Media and head of Rainmaker/Mainframe Studios.

Goff says this is a key development, and not just optics.

“The depth of management is critical to gaining the confidence of major production studios where many decisions are made out of Hollywood,” he says. “Across Michael Hirsh (Chairman, CEO), Fred Seibert (Chief Creative Officer, Founder, CEO of Frederator Networks) and now Mark Taylor, we look for WOW! to continue adding both production service work and IP driven productions where sponsorships are critical to guarantee upfront positive economics.

In a research update to clients today, Goff maintained his “Buy” rating and one-year price target of $2.00 on WOW Unlimited, implying a return of 83.5 per cent at the time of publication.

Goff thinks WOW will post Adjusted EBITDA of negative $4.0-millin on revenue of $72.0-million in fiscal 2018. He expects those numbers will improve to EBITDA of positive $4.0-million on a topline of $97.0-million the following year.

“We see the shares as significantly undervalued with the derived enterprise value at $29M against forecast 2019 EBITDA at $4M or ~$6.0-6.5M against the estimated start-up drain associated with WOW’s OTTP initiatives VRV with AT&T and CraveTV with BCE,” he adds.