Still more upside to MediaValet, says iA Capital

It’s been a good start to the year for MediaValet (MediaValet Stock Quote, Charts, News, Analysts, Financials TSX:MVP), whose share price is already up about 20 per cent, but investors can expect more upside, says iA Capital Markets analyst Neehal Upadhyaya. In a Wednesday report, Upadhyaya reiterated a “Buy” rating and $1.50 target price on MVP, saying the digital asset management company is continuing to provide a strong value proposition for its clients.

Vancouver-based MediaValet, which provides digital asset management (DAM) solutions to enterprise clients to help manage, organize and publish their digital assets, announced on Wednesday an expansion under the master services agreement with one of its largest customers, a leading entertainment company. The $135K expansion represents the fourth for the company’s DAM services since the customer was onboarded in September, 2019, over which time MediaValet has now tripled its original annual recurring revenue (ARR) with that customer.

MediaValet added that the customer has engaged MVP’s recently launched professional services team for a statement of work (SOW) for the delivery of deduplication, metadata and library services aimed at increasing efficiency, reducing operating costs and infrastructure complexity and expanding the customer’s access to its assets. 

“We focus on making DAM easy, even for the largest and most complex of organizations,” said David MacLaren, founder and CEO of MediaValet, in a press release. “We believe this makes us unique as not many DAM solutions, let alone cloud-native ones, can handle the scale and complexity that we can. This platform expansion and engagement with our Professional Services team speaks volumes to both the scalability of our platform as well as to the overall value that we bring to our customers.”

Upadhyaya said MediaValet provides viable return on investment to its clients, which supports iA Capital’s investment thesis on the company, and that in times of economic uncertainty, customers are seeing the value MVP provides in terms of cost cutting, among other things.

“We expect the Company to continue growing at a strong 30 per cent+ clip over the next two years and land and expand scenarios like today’s announcement will play a material role in the company achieving those expectation,” Upadhyaya said.

Looking ahead, Upadhyaya is forecasting MVP to generate full 2022 revenue and adjusted EBITDA of $13 million and negative $9.6 million, respectively, and 2023 revenue and EBITDA of negative $5.5 million, respectively.

“Despite the recent uptick in the stock price, MVP’s valuation is still compelling as it is trading at just 2.9x our 2023 revenue estimates, well below its US SaaS comps at 6.3x, its Canadian SaaS comps at 5.9x and the overall peer group at 6.0x,” the analyst said.

At the time of publication, Upadhyaya’s $1.50 target represented a projected one-year return of 13.6 per cent.