POPR stock is cheap, Eight Capital says

Its second quarter results are in the books and Eight Capital analyst Adhir Kadve continues to believe there is money to be made on PopReach (PopReach Stock Quote, Chart, News, Analysts, Financials TSXV:POPR).

On August 29, POPR released its Q2, 2023 results. The company posted Adjusted EBITDA of $4.0-million on revenue of $39.1-million a topline that was up 7.1 per cent over the same period last year.

“We delivered another quarter with strong and consistent growth in adjusted EBITDA and adjusted free cash flow while completing two acquisitions that further diversify our revenue streams and customer base,” said Jon Walsh, CEO of PopReach. “This has provided the business with greater stability in a challenging macroeconomic environment, and the breadth of the full stack digital offering we provide to advertisers sets us up for a seasonally strong second half of the year.”

Kadve gave his take on the quarter.

“PopReach reported Q2/F23 results which were largely in-line with Consensus expectations. Early integration of acquired assets continues across the organization with several of the assets leveraging one another’s capabilities and/or technology. As the integration progresses and key synergies materialize, PopReach notes that this should lead to strong cross and upselling opportunities and ultimately allow PopReach to gain greater wallet share from current customer and chase a larger profile of new customers, an important consideration as we head into the seasonally stronger H2 period.”

In a research update to clients August 30, the analyst maintained his “Buy” rating and one-year price target of $0.40 on POPR.

Kadve thinks POPR will post Adjusted EBITDA of $18.2-million on revenue of $171.4-million in fiscal 2023. He expects those numbers will improve to EBITDA of $23.9-million on a topline of $188.5-million the following year.

“Our valuation is based on 6.0x F24E EV/Adj. EBITDA. POPR currently trades at 4.6x F24E EV/Adj. EBITDA, a discount to a peer group of AdTech peers who trade at 12.7x and a group of Independent Game Publishers who trade at 7.7x,” the analyst said. “Key risks to our target price and rating include: Macroeconomic uncertainties, execution and integration risk on M&A.”

What does PopReach do? (via company handout)

Popreach, a Tier 1 Issuer on the TSX Venture Exchange, with shares also trading on OTCQX(TM) Best Market, is a multiplatform technology company focused on acquiring, optimizing and growing companies and assets that provide services, technology or products within the digital media ecosystem. Popreach’s portfolio includes: Popreach Games, a free-to-play mobile game publisher; NotifyAI, a push notification subscription and monetization platform; Q1Media, a digital media advertising services provider; Contobox, an award-winning personalization, eCommerce and creative advertising technology platform; Ubiquity, an omnichannel marketing network and technology platform; SCS, a brand transformation service provider; and OpenMoves, a B2B and B2C performance and growth marketing platform.