Further upside over the near term might be hard to come by for Mediavalet (Mediavalet Stock Quote, Chart, News TSXV:MVP) but the company\u2019s longer-term prospects in the red-hot digital asset management space should make the stock a winner. That\u2019s the take from PI Financial\u2019s David Kwan who initiated coverage of Mediavalet on Monday with a \u201cBuy\u201d rating and $3.00 target. Vancouver-based Mediavalent is a mid-sized to enterprise, cloud-based digital asset management (DAM) company on Microsoft\u2019s Azure, giving companies a platform to store, manage, secure and distribute their corporate assets such as marketing, sales, design and engineering. Starting out as an internal solution for photography and content services company VRX Studios, Mediavalet launched its cloud-based DAM in 2010 and then sold VRX in 2014 to focus exclusively on the cloud-based DAM market. The stock started climbing in late 2019 and has really taken off in 2020 where its share price is now up over 235 per cent for the year. Kwan said the company has seen a sharp acceleration in growth since the launch of MediaValet V4 in May 2018, which had 77 per cent revenue growth and 85-per-cent annual recurring revenue growth in fiscal 2019, all of which was organic. 2020\u2019s growth stalled somewhat due to COVID-19, with revenue up 64 per cent and ARR up 54 per cent year-to-date, but the road ahead should include ramp up again in a few quarters, Kwan said. \u201cGiven the significant share price outperformance and related re-rating this year coupled with a potential COVID-driven slowdown in growth in the coming quarters, we believe upside in the near-term could be limited. However, (organic) growth is still expected to remain well above 30 per cent year-over-year, much better than its SaaS peers, and begin re-accelerating back to the +50 per cent year-over-year range in a couple of quarters, which should then help the share price outperform and narrow the valuation gap versus the peer group,\u201d Kwan said. The analyst said the ongoing secular story regarding digital transformation has made for strong growth in digital assets and the move from on-premise systems to the cloud not only makes digital content more accessible for consumers, given the rapid uptick in bandwidth speeds, but clears a space for DAM solutions, which Kwan says are a \u2018must-have\u2019 for mid-size and enterprise organizations. Kwan noted that the market for DAM solutions currently stands at about US$3 billion and is expected to grow to US$7.5 billion to US$10 billion by the middle of the decade, with much of that growth coming from increased demand for cloud-based solutions. On the disruption caused by the COVID-19 pandemic, Kwan said, \u201cWe note that DAM solutions tend to be among the higher priority solutions organizations will spend on for their IT budgets, which was reinforced by conversations with some of MVP\u2019s customers. Despite financial challenges related to the COVID-19 pandemic, the customers we spoke with said MVP\u2019s DAM was one area where they did not have any plans on reducing spending, given amongst other things, the cost savings realized from using MVP\u2019s DAM solution (and the increased costs should they decide to cancel their subscription).\u201d Ahead of Mediavalet\u2019s third quarter financials due on November 6, the company last reported earnings on August 18 where its second quarter featured revenue up 56 per cent to $1.7 million and an EBITDA loss of $765,000 compared to a loss of $680,000 a year earlier. Mediavalet said in its second quarter press release that its DAM business had a quick rebound in June, with improving pipeline metrics in each month since then. \u201cThese are challenging times for all, we\u2019re simply happy we can help organizations quickly transition to a safe, secure and reliable work-from-anywhere environment. As a result, revenue is at a record high, and we continued to see strong growth in our customer base both here at home and around the world,\u201d said founder and CEO David MacLaren. \u201cWe\u2019re confident that our expanded product and customer success teams will be able to provide a helping hand to our customers - large and small - where necessary in the months to come.\u201d Looking ahead on Mediavalet, Kwan is forecasting fiscal 2020 revenue and adjusted EBITDA of $7.4 million and negative $4.1 million, respectively, and fiscal 2021 revenue and adjusted EBITDA of $10.3 million and $5.3 million, respectively. The analyst is predicting positive, sustainable adjusted EBITDA to be coming in 2023 \u201cat the earliest\u201d but said that even with an elevated cash burn the company should have sufficient resources to execute on its high-growth plan. As for catalysts for the stock, Kwan pointed to new (large) customer wins, M&A activity and quarterly financial results. Kwan said given the current fragmentation in the DAM space, there is likely to be ongoing consolidation. MVP is looking at tuck-in acquisition opportunities but could also itself be an attractive target, he said. On valuation, Kwan wrote, \u201cOn an absolute basis, MVP is not a cheap stock at 8.0x EV\/Sales (CY21e) and 5.0x EV\/Sales (CY22e). However, it is still trading at a discount to its SaaS peers at ~10x, despite it having one of the strongest revenue growth profiles (with all of the growth being organic).\u201d At press time, Kwan\u2019s $3.00 target represented a projected 12-month return of 28.8 per cent.