Playmaker Capital is looking very attractive, says Haywood

Ahead of fourth quarter financials from sports media brand company Playmaker Capital (Playmaker Capital Stock Quote, Charts, News, Analysts, Financials TSXV:PMKR), Haywood Capital Markets analyst Gianluca Tucci says tailwinds in the iGaming sector will benefit Playmaker. Tucci delivered a report to clients on Wednesday where he reiterated a “Buy” rating on the stock and C$1.10 per share target price, representing at press time a projected one-year return of 129 per cent.

Tucci pointed to forecasts on the US online gambling market by BlueWeave Consulting which sees the market growing from $2.7 billion in 2021 to $7.6 billion by 2028 for a 16.4 per cent CAGR. At present, sports betting is legal in 31 states as well as the District of Columbia, with four states with laws in place and are awaiting the launch of the industry. Tucci noted that Ohio’s sports betting market went live on January 1, 2023, and is expected to become a top five iGaming market.

Tucci said that Playmaker’s Wedge Traffic, a Glasgow-based affiliate marketing business acquired by Playmaker this past October, is directly exposed to iGaming and will be a primary beneficiary of growth in the US market. Further, Tucci said his conversations with PMKR management have reinforced his confidence in continued growth across the company’s sports media and iGaming-facing verticals.

“We cannot understate the impact new state openings has on Wedge,” Tucci wrote. “Wedge generated $6.0 million and $3.2 million in trailing 12 months revenue and adjusted EBITDA as of Q3/22, figures we expect accelerated growth from.”

On the upcoming Q4/22, Tucci is calling for revenue of $10.3 million and adjusted EBITDA at $3.8 million, with the World Cup having an outsized impact on the results. For the full 2023 year, the analyst is forecasting $39.4 million in revenue (implying a 24 per cent year-over-year growth rate) and EBITDA at $14.0 million (for a 47 per cent growth rate). (All figures in US dollars except where noted otherwise.)

“Playmaker has established a solid track record of 15 acquisitions to date complemented by organic growth,” Tucci wrote. “As we look forward, the hyper-competitive nature of iGaming and the race for users is a solid tailwind for PMKR that should provide organic estimate/valuation support. PMKR has been operating profitably on a trailing basis since its listing and while we look for incremental investment in growth we do not anticipate this to change.”