Beat the market with Playmaker Capital, Haywood says

Want a recession-resilient piece of the advertising market? You should be thinking about sports media, says Haywood Capital Markets analyst Gianluca Tucci, and in that vein, the right play is Playmaker Capital (Playmaker Capital Stock Quote, Charts, News, Analysts, Financials TSXV:PMKR). 

Tucci provided an update to clients on Thursday on Playmaker, reiterating a “Buy” rating on the stock and C$1.20 target price, good for a one-year projected return of 140 per cent.

Commenting on Playmaker’s place within the sports media ecosystem, Tucci argued that with their deep fan bases and continuous media events, sports leagues and federations  play an outsized role in our media and entertainment landscape. And brands looking to reach the avid sports fan need to avail themselves of companies like Playmaker, which has a portfolio of sports media brands which connect viewers and fans to sports betting companies, advertisers and sports leagues. 

“With 94 of the 100 most watched telecasts in 2022 being sports events, there is a clear and obvious reason why we believe the niche of sports media advertising is a recession resilient segment of the global advertising market,” Tucci wrote. 

Playmaker has Yardbarker, a US media business recently voted in the top ten for sports betting content, as well as Wedge Traffic, an iGaming affiliate business.

Tucci provided an update on the US sports betting market, where governors in Vermont and North Carolina have recently signed sports betting bills into law, making for upcoming catalysts for Playmaker’s business, according to the analyst.

“We remind readers of the outsized effect Ohio’s sports betting market opening had on PMKR results in Q1/23 – results here – we expect a similar step function in PMKR revenue once a market opening date for North Carolina is set. We believe PMKR is well positioned to capture continued market opening tailwinds via its Wedge Traffic operating division,” Tucci wrote.

On its financials, Tucci has forecasted Playmaker’s revenue going from $40.3 million in 2022 to $50.3 million in 2023 and to $55.3 million in 2024. On adjusted EBITDA, the call is for PMKR to move from $12.4 million in 2022 to $16.8 million in 2023 and to $18.3 million in 2024. (All figures in US dollars except where noted otherwise.)

Tucci said the company has a solid M&A track record, with 15 acquisitions to date, and complementary organic growth. 

“The hyper-competitive nature of sports betting/iGaming and the race for users is a solid tailwind for PMKR that should provide organic estimate/valuation support. Magna Global’s prediction of ad spend growth in 2023 to be the strongest across media/entertainment, travel, and betting, is a positive catalyst for PMKR, alongside continued sports betting market openings at the state level,” Tucci said.