Axion Ventures has a 52 per cent upside, PI Financial says

Look for momentum to build for Axion Ventures (Axion Ventures Stock Quote, Chart TSXV:AXV), says analyst David Kwan of PI Financial, who is expecting more frequent updates on the traction of AXV’s Rising Fire video game in the China market.

On Monday, Kwan increased his price target on Axion Ventures from C$1.50 to C$1.75.

Last week, Axion Ventures announced the closing of its previously announced cross distribution and private placement which raised $5.75 million through the sale of 5.75 million shares at C$1.00 per share. (All figures in US dollars unless where noted otherwise.)

Kwan says that along with being used to further develop and commercialize Rising Fire and other games that Axion has in the pipeline, the funds should also help improve the trading liquidity of the stock.

The analyst thinks that the news flow for AXV is set to pick up and rates the private placement closing as having a positive impact on the stock.

“We are expecting to see more frequent updates on Rising Fire that should help investors better assess the traction the game is having in the China PC/online market, as Tencent is poised to significantly expand the exposure of the game on its WeGame platform (from 1.5 million to 15 million users and (well) beyond) and increase the marketing spend for the game,” Kwan said in a research update to clients.

“We have made revisions to our forecasts to reflect a slower than expected rollout of Rising Fire, which has been partially offset by a stronger contribution from their game pipeline. We 300 are forecasting revenue of $8.8 million in FY18 (was $9.0 million) and $30.2 million in FY19 (was $56.2 million) with Adjusted EBITDA of ($10.3 million) in FY18 (was ($10.1 million) and $8.3 million in FY19 (was $29.7 million),” he writes.

Kwan is maintaining his “Buy” rating with the raised target of C$1.75, which represents a projected return of 52.2 per cent at the time of publication.