Globe & Mail - $16 US target The upcoming launch of Mogo Inc.’s (MOGO-Q, MOGO-T) trading platform could provide “meaningful upside,” according to H.C. Wainwright analyst Scott Buck, who sees it as a catalyst for member growth, revenue and share appreciation.
He projects MogoTrade, which is expected to be released in the fourth quarter, could be a US$100-million revenue opportunity over the next 3-5 years, and can be “further monetized through other existing Mogo products.”
“We do not believe any meaningful contribution from MogoTrade is included in the company’s 2022 revenue guidance of between C$70.0-million and C$75.0-million, suggesting potential upside to current guidance,” said Mr. Buck. “We recommend investors take advantage of the recent pullback in MOGO shares, down 38.0 per cent since June 30th, versus a 2.2-per-cent decline in the Russell 2000, ahead of more positive news flow and potential increase in consensus estimates.”
Concurrently, Mr. Buck also sees the Canadian market bringing “significant room for future growth.”
“While meaningfully smaller than the U.S. market, Mogo represents a leading fintech in Canada, a geography which has been somewhat slower than the U.S. in it’s to move away from traditional banks,” he said. “However, Canadians are now turning to financial technology companies for added convenience, lower costs, and additional services including cryptotrading and commission free stock trading. This trend has driven the valuation of Canadian Fintech peer WealthSimple to C$5.0-billion at its most recent capital raise in May 2021. We believe WealthSimple has a similar size user base and generates something close to twice the revenue of Mogo, which trades at a meaningful discount and provides the liquidity of a public company. As Mogo adds stock trading capabilities later this year, we believe investors will begin to recognize the significant valuation discrepancy between Mogo and fintech pees.”
Seeing it “well positioned should larger U.S. fintech come calling on Canada,” the analyst raised his target for Mogo shares to US$16 from US$12, reiterating a “buy” rating. The average on the Street is US$14.50.