CanaccordStill looking for a double. GLTA
Canaccord Genuity analyst Robert Young cut his Enthusiast Gaming Holdings Inc. target to $7 from $9, keeping a “buy” rating. The average is $9.38.
“Enthusiast Gaming provided preliminary Q4 results [Tuesday] morning, which were broadly ahead of our and consensus estimates,” said Mr. Young. “Q4, which is typically a seasonally strong quarter, is expected to report revenue growth of 34 per cent, with strong CPMs and recent acquisitions roughly offsetting FX headwinds. The early release provides confidence on continued share gains and offsets worry on potential ad spend headwinds. Strong Q4 CPMs and higher-margin revenue lines growing in the mix support continued margin expansion. Enthusiast continues to see strong direct sales momentum, up 167 per cent year-over-year and growing to 17 per cent of revenue. Subscription also saw strong new customer adds, driven by organic initiatives but supported by the addition of U.GG. Recall that Enthusiast is in a beta release of its ProjectGG social platform, which is expected to be a further tailwind to the subscription business. While Enthusiast did not provide preliminary operating margin or EBITDA figures, management indicates that the cash balance was $22.7M exiting December, with an undrawn revolver.
“Given the strong Q4 indication and positive underlying trends, we remain positive on EGLX shares despite the recent sell-off. We remain BUY rated.”