Playmaker has a 147 per cent upside, says Haywood

After reviewing the latest quarterly results from digital sports media company Playmaker Capital (Playmaker Capital Stock Quote, Charts, News, Analysts, Financials TSX:PMKR), analyst Gianluca Tucci of Haywood Capital Markets recommended that investors accumulate shares at current levels. Tucci reiterated a “Buy” rating and C$1.20 target price in a Tuesday update, good for a projected one-year return of 147 per cent.

Toronto-based Playmaker, which has a portfolio of sports media brands, released its first quarter 2023 results on Monday, featuring revenue up 69 per cent year-over-year to $15.7 million and adjusted EBITDA up 76 per cent to $5.9 million. (All figures in US dollars except where noted otherwise.)

Playmaker, which last week was named sports media company of the year by sports and iGaming industry watcher SBC, said it’s continuing to scale its business, with 180 million followers across its social media accounts and over 101 million users per month on its web properties, an increase of 14 per cent from a year ago.

“Deepening our connection to sports fans in the US and Canada is key to our growth strategy, and I am pleased to report that engagement against our North American web, podcast, video, and newsletter products experienced significant year-over-year growth in Q1,” said Jordan Gnat, CEO, in a statement.

On the quarterly numbers, Tucci said the $15.7 million topline was ahead of his estimate at $14.0 million and the consensus at $13.4 million, while adjusted EBITDA at $5.9 million was also better than his expected $4.1 million and the Street at $4.3 million.

“Q1 continued the momentum in the race for eyeballs with PMKR’s web properties reaching a monthly high of 101 million users (+14 per cent y/y) and total user sessions exceeding 642 million,” Tucci wrote.

“While we have observed general softness in ad-spend, we have not witnessed similar impacts to the iGaming ad-spend segment. As we look forward, the hyper-competitive nature of iGaming and the race for users is a robust tailwind for PMKR that should provide organic estimate/valuation support,” he said.

On the M&A front, Tucci said Playmaker has the capacity for tuck-ins while it continues to digest and integrate the Wedge Traffic acquisition made at the end of last year.

“PMKR has established a solid track record of 15 acquisitions to date complemented by organic growth. We view the current valuation as attractive in the context of a growth business playing in an industry experiencing robust tailwinds,” he said.

Up ahead, Tucci is calling for full 2023 revenue of $50.3 million and moving to $55.3 million in 2024, while adjusted EBITDA is expected to go from $16.8 million in 2023 to $18.3 million in 2024.