Trending >

theScore has an 89 per cent upside, Mackie Research says

theScore

Mackie Research analyst Nikhil Thadani says the share price for theScore (theScore Stock Quote, Chart TSXV:SCR) should benefit from the company’s soon-to-come launch of sports betting in the state of New Jersey, likely followed by other states and possibly Ontario in the future.

After theScore’s second quarter financials, Thadani’s update to clients on Friday holds steady and maintains his “Buy” recommendation and $0.70 target price.

Digital sports content company theScore announced its second quarter fiscal 2019 on Thursday, with founder and CEO John Levy saying the company made huge strides over Q2 and are on schedule to launch its mobile sports betting platform by mid-2019.

“Our combination of sports media and sports betting will be a truly differentiated offering for the North American market, and we can’t wait to unveil it,” Levy said. “While sports betting initiatives were naturally a big priority for us in Q2, we were also excited to set new records for engagement on our app, as well as a new quarterly record for our social reach, showcasing the power of our audience once again.”

Thadani says theScore’s Q2 revenue of $6.8 million was lower than his $7.1 million estimate and the consensus $7.4 million, which the analyst attributes to slower quarter-over-quarter direct sales and industry-wide programmatic advertisement softness. The company’s EBITDA loss of $2.1 million was greater than his estimate of negative $800,000 and the Street’s negative $500,000, which Thadani chalks up to investment in its sports betting launch.

“Management reiterated the company remains on track for its eagerly awaited C2019 NJ sports betting launch, subject to regulatory approvals and licenses,” says Thadani. “We expect additional state launches in the future and perhaps Ontario in Canada, given proposals by Ontario’s Progressive Conservative government to legalize online gambling in the province. To this end, the company intends to actively participate in the Ontario government’s consultation process.”

“Our estimates are mostly unchanged, with F2020 revenue upside from sports betting. With recent hiring the company could also begin to monetize eSports more aggressively in the future, which is not captured in our estimates. That said, in H2 F2019, the company could increase investments into new products and content related to sports betting and US college sports among other areas. We would not be surprised to witness some marketing expenses around the time of the sports betting launch,” he says.

Thadani is calling for fiscal 2019 revenue and EBITDA of $29.3 million and negative $3.5 million, respectively, and fiscal 2020 revenue and EBITDA of $37.5 million and $2.5 million, respectively. His $0.70 target represents a projected return of 89 per cent at the time of publication.

  •  
  •  
  •  

About The Author /

Jayson is a writer, researcher and educator with a PhD in political philosophy from the University of Ottawa. His interests range from bioethics and innovations in the health sciences to governance, social justice and the history of ideas.

Comment

Leave a Reply

Your email address will not be published. Required fields are marked *

Cantech Alerts.

Timely picks from Canada's best analysts. 

F                                                                      
close-link