In a preview of upcoming quarterly results from Loop Media (Loop Media Stock Quote, Charts, News, Analysts, Financials NYSE:LPTV), Roth Capital Partners analyst Darren Aftahi reiterated a “Buy” rating on the stock on Friday, saying despite headwinds in the digital ad space Loop’s revenue ramp through 2023 and 2024 still looks good.
Loop Media is a digital video platform that connects digital advertising and content publishers, with business segments in owned and operated AVOD, the Loop Partner Network, Consumer CTV and SVOD and Other. The company last reported earnings in mid-December when its fiscal fourth quarter 2022 featured revenue up fivefold compared to a year earlier at $12.2 million and adjusted EBITDA flat year-over-year at negative $2.7 million. (All figures in US dollars.)
Aftahi said Roth Capital recently hosted investor meetings with Loop management and came away with three key takeaways. He said the company is highly focused on reducing its cost of content, which is the largest component of its cost of goods sold, and the analyst expects gross profit to benefit through those efforts over the course of calendar 2023.
Next, he said advertisers are increasingly turning to digital out-of-the-home (DOOH) platforms like Loop’s to allocate their CTV dollars. And finally, Aftahi said he “got the strong sense” that the calendar 2023 could see geographic expansion opportunities for Loop, with optimism hinted at about expansion beyond the United States.
Looking ahead, Aftahi is forecasting LPTV to generate first quarter fiscal 2023 revenue of $13.8 million and EBITDA at negative $4.1 million. For the fiscal year, he is calling for $67.6 million in revenue and negative $11.4 million in EBITDA. Adjusted earnings are expected to turn positive in 2024 at EBITDA of $0.6 million, with a topline at $102.7 million.
“We believe LPTV saw some benefits from political ads in F1Q (Dec.) which keep us comfortable with our estimates along with what we expect to be a notable reduction in normalized operating costs. We believe its Partner Network is continuing to see increased interest and a building pipeline, which should enable broader scale. Incremental takeaways from our recent NDR are summarized below. We believe a path to breakeven could occur by the end of CY23 (ahead of our modelled expectation),” Aftahi said.
With his “Buy” rating, Aftahi maintained a 12-month target price of $6.50, which at press time represented a projected return of 9.4 per cent.