RE:RE:RE:RE:RE:RE:RE:RE:RE:RE:RE:RE:RE:RE:RE:RE:Earnings...From the Globe the other day:
In response to Thursday’s announcement of an expansion of its credit facility, H.C. Wainwright’s Scott Buck cut his Enthusiast Gaming Holdings Inc. (
,
) target to US$2 from US$3, keeping a “buy” rating. The average is $3.03 (Canadian).
“We believe access to additional capital, coupled with a strategic shift toward higher-margin products should provide sight lines to profitability and cash generation,” he said. “We believe this could occur as early as 4Q23,benefiting from seasonal tailwinds. We are currently modeling full year operating profitability in 2024. This profitability comes despite ongoing macroeconomic headwinds which continue to have a negative impact on programmatic advertising. As these headwinds ease, we believe a new leaner Enthusiast Gaming will be positioned to see a meaningful acceleration in revenue growth and rapidly expanding adj. EBITDA margins as operating leverage improves. Revenue growth should be driven by the expansion of the company’s high margin subscription business as well as additional unique gaming content opportunities. Our longer-term optimism is further bolstered by strong underlying secular trends in gaming, which should continue to garner a growing percentage of advertisers’ wallets. We recommend investors take advantage of ongoing share weakness to accumulate a position ahead of stronger operating beginning in 2H23 and carrying into 2024.