Atrium Research analyst Nicholas Cortellucci maintained his Buy rating and CA$0.15 price target on QYOU Media (QYOUF:OTCMKTS;QYOU:TSXV) in a February 28 research note.
QYOU Media is a Canada-based company focused on India's rapidly expanding digital entertainment space.
According to analyst Nicholas Cortellucci, QYOU has "reported several positive updates over the last month" across its key business segments, including "record growth from its influencer marketing business" and its gaming app "gaining significant traction." With strong momentum, attractive valuation, and profitability inflection ahead, the analyst sees substantial upside potential.
Financial Results & Projections
QYOU Media has delivered "ten consecutive quarters of YoY growth" in its financials. Moving forward, the shift is "from growing its topline to reaching EBITDA profitability and positive cash flow." Atrium expects QYOU to hit positive adjusted EBITDA by Q4 2024 on 40% sales growth next year.
India's Favorable Demographics & Digital Media Tailwinds India represents an immense growth opportunity with over 650 million people under 25 years old. The rise of short-form social videos among youth has powered booming growth in digital advertising and influencer marketing budgets. Over the past six years, India's digital ad spend has expanded at a 23% CAGR. With its focus squarely on Indian digital media, QYOU is well-positioned to capitalize on the massive tailwinds.
Recent Business Developments
On the influencer marketing front, QYOU's U.S. and India divisions see "the strongest growth in company history" with repeat blue-chip brand clients spanning Paramount, Amazon, Spotify, Hasbro, and more.
The launch of a new business intelligence unit also enhances data-driven targeting capabilities. Additionally, the QGamesMela gaming app eclipsed 2.5 million total downloads in under four months, outpacing targets. A sponsorship agreement to promote QGamesMela contests on QYOU's TV channels with 90 million weekly viewers should further boost user acquisition efforts.
Executive Commentary
CEO Curt Marvis stated, "Our influencer marketing divisions are firing on all cylinders right now with the wind solidly at our backs in both the U.S. and India markets."
He added, "It has been incredible to witness the growth firsthand in downloads and usage behind QGamesMela."
Valuation & Upside Drivers
With the recent pullback in QYOU shares, Atrium sees a "material buying opportunity" trading at just 0.8x 2023 revenue versus a 1.2x peer average. Profitability inflection and reduced cash burn reinforce the bull case.
The firm's CA$0.15 target implies a 173% upside potential for investors.
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Disclosures for Atrium Research, QYOU Media, February 28, 2024
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