A third quarter of "mixed" results isn't shaking Cantor Fitzgerald Canada analyst Ralph Garcea's conviction that Tangelo Games (Tangelo Games Stock Quote, Chart, News: TSXV:GEL) is undervalued. Yesterday, Tangelo Games, formerly known as Imperus Technologies, reported its Q3, 2016 results. The company lost $5.89-million on revenue of $9.31-million, a topline that was 58 per cent better than the $5.9-million the company posted in the same period last year. "We are pleased with our performance in Q3. Our adjusted EBITDA grew quarter over quarter from $2.76-million in Q2 2016 to $2.96-million in Q3 2016," said CEO James Lanthier. "While our revenues experienced the typical slight seasonal dip that accompanies the summer months, we are positive with respect to the KPI trends in the business and are now seeing the benefits from the integration of Akamon and Diwip play out across multiple dimensions." Garcea notes that Tangelo's loss of $0.03 was worse than his expectation of a loss of $0.02, as was the company's revenue number, which he expected would be $10.5-million. The company's EBITDA number of $3.0-million met his expectation. The analyst says the company is working through its debt concerns and the acquisition of recent integrations to deliver results he expects will continue to improve. "With three full quarters of integration with Akamon and Diwip, GEL has printed their first full quarter of 30%+ EBITDA margins," says Garcea. "We believe this is a result of sharing best practices and cross-selling into the user base. GEL has right-sized the business by cutting 25% of its workforce in Q3/16. GEL has an upcoming debt repayment at the end of 2016 – they are close to announcing a positive resolution before year end and are reviewing strategic alternatives with their lender, Third Eye Capital (TEC). In addition, TEC has waived certain terms of their credit agreement and amended the covenant thresholds for future periods – giving GEL more flexibility in the near-term." In a research update to clients today, Garcea maintained his "Buy (Speculative)" rating and one-year price target of $0.50 on Tangelo Games, implying a return of 669 per cent at the time of publication. Garcea thinks Tangelo will post Adjusted EBITDA of $11.1-million on revenue of $40.3-million in fiscal 2016. He expects these numbers will improve to EBITDA of $16.6-million on a topline of $46.2-million the following year.