QYOU Media Is A BUY – Clarus Securities Research – Target Price 170% Above Current Market

Joseph MacKay who is the Technology Analyst for Clarus Securities has just initiated coverage on QYOU Media with a $1.10 Target Price, calling it Undervalued; “QYOU is trading at 4.4x and 1.8x 2018E and 2019E EV/EBITDA in a sector that typically trades at 8.0x-12.0x. We believe that as revenue ramps in 2H17 and as the company becomes EBITDA positive in Q1/18, this valuation discrepancy will disappear.”

As of this writing, the stock was trading in the $0.40 range with Clarus accounting for approximately 40% of the volume of close to 400 thousand shares.

QYOU Media, which is lead by the team that steered MTV, Atlantic Records and Lionsgate Digital to great success, has already created over 5,000 hours of original programming with its “Best-of-the-Web” video content for multiscreen distribution that targets the millennial and Gen-Z market through global content providers on any device. Its programming is now aired in more than 30 countries.

QYOU has proprietary technology that underpins its ability to identify premium “best-of-the-web” content.

Mr. Mackay commented that the low valuation comes from a lack of investor knowledge as QYOU is new to the market as it only began trading in March of this year with the completion of a Reverse Take-Over and it has a short history of publicly reporting financial results.

Below are the analyst’s forecasts through 2019, which call for more than a doubling of revenues in 2018 compared to this year and a healthy jump to more than $25 million in 2019. Mr. MacKay’s statement that the company is slated to become EBITDA positive in Q1/2018 also reflects management’s public position.

Mr. MacKay notes QYOU’s marquee customers, which speaks to the quality and attractiveness of the programming. He noted a few major names; “QYOU provides content to Sinclair’s TV station, “TBD”, which will be available over-the-air in 81 U.S. markets by the end of 2017. With Tata Sky, QYOU is providing content to 17M connections while with Ericsson, QYOU’s content has been added to Ericsson’s new delivery platform which is being rolled out to over 40 service providers”.

The market tends to embrace companies with a strong recurring revenue stream. QYOU is now at the front end of that growth, which prompted the comment from the analyst that, “With the typical contract 2-4 years in length, 70-80% of QYOU’s revenue is recurring on an annual basis. Based on our forecast, QYOU will be EBITDA positive in Q1/18 and will generate $4.9MM in EBITDA in 2018 up from negative $2.7MM in 2017”.

To view QYOU’s latest investor presentation and other related material, please visit: https://howardgroupinc.com/qyou-media/