Following recent share price depreciation, Canaccord Genuity analyst Doug Taylor sees the risk-reward proposition for Mogo Finance Technology Inc. “again become compelling for investors looking for exposure to the cryptocurrency/fintech theme.”
That led him to raise his rating for the Vancouver-based company to “speculative buy” from “hold.”
On Thursday, Mogo reported first-quarter results that fell in line with expectations, but Mr. Taylor said the release was “eclipsed” by its announcement of another “meaningful” position in Coinsquare. It now possesses a 37-per-cent stake in the crypto-trading platform with a warrant to increase its ownership to 48 per cent.
“Given Coinsquare’s financial performance of late - the latest run rate was $95-million in revenue and 50-per-cent EBITDA margins – and the multiples offered to other cryptocurrency trading platforms, you could argue that Mogo is getting the asset for a bargain,” said the analyst.
“As the company continues to build its ownership in Coinsquare, potentially to the point of consolidating its results, we think there is the potential to further surface value.”
Emphasizing increased confidence in the potential upside of Mogo’s cryptocurrency strategy, he trimmed his target to $12 from $14. The average is $15.