Paradigm Capital Markets analyst Corey Hammill is evening out his expectations for Enthusiast Gaming Holdings Inc. (Enthusiast Gaming Stock Quote, Chart, News TSX:EGLX). Despite maintaining a “Buy” rating for the company, Hammill dropped his target price from $9.50/share to $9/share for a potential return of 157 per cent in an update to clients on Tuesday. Headquartered in Toronto, Enthusiast Gaming operates an online network of approximately 100 gaming related websites, with operations in Canada, the United States and internationally. Hammill’s updated analysis comes on the heels of Enthusiast Gaming releasing its fourth quarter financial results for the 2021 fiscal year, paired with year-end figures. “We firmly believe investors should focus on EGLX’s media and content segment, which monetizes its user platform and generates revenue essentially on a per-user basis,” said Hammill, whose target drop came as a byproduct of revised estimates. “Our assumption is that EGLX will likely become EBITDA positive in Q4/22, reflecting a firm commitment by management to grow the top line with higher-margin revenue.” The company’s financial quarter was headlined by $56.9 million in total revenue, good for a 34 per cent year-over-year increase to come in slightly ahead of the Paradigm Capital projection of $51 million and the Street estimate of $52 million. Meanwhile, direct ad sales made the biggest uptick percentage-wise at a 167 per cent year-over-year increase, pulling in $8.8 million in revenue, while providing a beat in relation to the $6.3 million projection from Paradigm Capital. The figure also made a positive contribution to the company’s gross margin, which came in at 24.1 per cent compared to 19.1 per cent in the final quarter of the 2020 fiscal year. The company ended the quarter with a $22.7 million cash balance, while the ARPU increased from $0.53 to $0.71 on a sequential basis. However, EGLX’s EBITDA was a slight miss at a $3.9 million loss compared to the loss projections of $3 million and $3.1 million set out by the Street and Paradigm Capital, respectively. Going forward, Hammill believes opportunities to improve that margin will come for Enthusiast if the company continues generating content for its monthly users, as it counts high-profile partnerships with platforms like Bell, Facebook, Microsoft, Paramount and PlayStation among its many relationships. “The historic focus has been on lower-margin programmatic ads,” Hammill said in explaining the continuously weaker EBITDA margins. “As the company’s market presence, credibility and sales team have increased, there has been an increasing shift toward direct ads. With a customer roster including Samsung, Disney, Gillette, Proctor and Gamble, AB InBev and many others under its belt, EGLX is improving monetization and increasing its ARPU.” Enthusiast Gaming also made significant inroads in terms of boosting its base, having nearly doubled its paid subscriber count from 122,000 to 220,000 on a year-over-year basis and taking a step forward from the 207,000 count provided in the previous quarter. “Our momentum continues and we are pleased to confirm our record breaking results from Q4 2021,” said Adrian Montgomery, CEO of Enthusiast Gaming in the company’s March 28 press release. “We are seeing strong repeat business in direct sales, continued conversions of viewers into paying subscribers, and strength in our product offerings, particularly in Addicting Games and U.GG. We expect this momentum to carry into 2022 and beyond.” The updated quarterly results prompted Hammill to revise his future financial projections, and after Enthusiast Gaming wrapped up 2021 with $167.4 million in revenue, Hammill lowered his 2022 forecast from $228.9 million to $219.8 million, which still presents a year-over-year increase of 31.3 per cent while coming in ahead of the Street expectation of $213.8 million. Hammill also introduced a 2023 projection of $272.8 million, setting a potential year-over-year increase of 24.1 per cent while coming in ahead of the Street estimate of $262.1 million. Meanwhile, Enthusiast Gaming produced a $19.1 million EBITDA loss for 2021 overall, though on account of its shifting ad focus, Hammill forecasts a turnaround on that number. Though he lowered his 2022 estimate from a $2.6 million loss to a $3.8 million loss (Street forecasts a $12.9 million loss), he projects the EBITDA figure to turn positive in 2023 at $5 million for an implied margin of 1.8 per cent, which comes in ahead of the $400,000 forecast set by the Street. Enthusiast Gaming has stumbled to a 62.8 per cent loss in its share price over the last 12 months and a seven per cent loss since the start of 2022. After hitting a 52-week high of $10.87/share on April 20, the stock has largely descended ever since, hitting a 52-week low point of $2.48/share on January 27.