Sports Betting Future
US Sports Gaming Industry Ready To Roll. Century Casinos, Inc (CNTY) & Draft Kings Inc (DKNG) Well Positioned For Growth
The 44-story Circa Las Vegas hotel and casino, scheduled to open in October, overlooks the Golden Gate casino.
“Play ball!”
Sports bettors and fans across America have been anxiously waiting four months to hear those two hallowed words.
So has Derek Stevens, chief executive officer of Las Vegas-based Circa Sports, who plans to open the $1 billion, 777-room Circa Las Vegas hotel and casino in October, featuring a three-story, state-of-the-art sports book.
It’ll be the best “seat-for-seat, pixel-for-pixel” sports book not only in Las Vegas, rivaling Westgate and Caesars Palace, but best in the world, Stevens confidently asserts during a recent interview at The D, his namesake hotel and casino formerly known as Fitzgerald’s.
Stevens has no fear of losing revenue to online sports betting, which is legal in 18 states following the U.S. Supreme Court’s 2018 decision to overturn the Professional and Amateur Sports Protection Act (PASPA), with legislation pending in eight other states.
Circa Sports CEO Derek Stevens
It shows America’s growing acceptance of sports gambling. Stevens jumped on the train in February when Circa Sports partnered with Century Casinos to launch a mobile sports betting app in Colorado.
Century Casinos Inc. (CNTY) is rated strong buy by one broker and buy by four brokers, with an average price target of $7.75. If this proves correct, Century stock provides upside potential of over 88% from Friday's close of $4.12. On comparative valuation metrics, CNTY trades at a significant discount to its casino industry competitors, trading at 25% discount to book value and 67% discount to the group. On a prices/sales basis, CNTY trades at approximate 60% discount. To shore up its balance sheet and secure growth capital, the company files a $100 million shelf offering.
“Before the Supreme Court ruling, I was asked about other states,” says Stevens, the Detroit native who unabashedly gambles on sports himself. “Will it hurt Las Vegas or not? I’ve always said it’ll be good for Las Vegas. It just grows the size of the pie.”
People who bet sports in their home state are going to eventually come to Las Vegas, he believes. “For all reasons, Vegas is Vegas, and the sports book is part of it,” he says.
Football fever
While many states saw growth in sports betting revenue before the COVID-19 pandemic shut down the economy, including live sporting events, the handle – or amount wagered – dropped off a cliff when bettors were limited to obscure sports such as Ukrainian table tennis, German soccer and a few UFC fights.
Along with MLB starting its 60-game season on July 23, the NBA, WNBA and NHL are resuming play in “bubble” environments, and the NFL is set to play in September, though fan attendance remains a question. College football is also in limbo.
Even with no fans or limited attendance, the popularity of the NFL and other pro sports will boost betting, says Michael Gaughan, owner of South Point hotel and casino in Las Vegas.
“Remember, football is still No. 1 in sports handle,” Gaughan notes.
“The main unknown is how many games will be played. California has banned all football in the state. The Rams and the Chargers will play in Las Vegas and Phoenix and the 49ers will (play) in Seattle. Also, the players union is another wild card.”
If all the games are played, it will be a “banner year for sports,” the longtime Las Vegas gaming executive believes. Everything changes if the season is curtailed due to different state regulations or player union demands.
Favorable laws
California ran into tribal opposition that killed sports betting legislation in June, but eight other jurisdictions are in the process of legalizing sports betting, including North Carolina, which is tribal; Tennessee and Washington, D.C., which have regulations in place; Washington, Virginia and Puerto Rico, which are currently in the regulatory phase; and South Dakota and Maryland, where sports betting will be on the ballot in November.
Circa CEO Stevens would consider expanding his sports betting app into other markets, but only if the regulatory environment is favorable. Some states such as Illinois and Montana have introduced sports betting legislation in a manner that is “not as inviting” as others, he says.
Illinois, for example, sets a money line of minus-125 each way, meaning bettors must wager $1.25 to win $1.00 no matter which side they bet, whereas Las Vegas is minus-110, sometimes minus-105 in promotions.
“Look at New Jersey, all the markets have been blown away. We expect the same thing in Colorado,” Stevens says.
California took a step back, but most gaming analysts and operators still see a wide-open window of opportunity following the PASPA ruling.
South Point’s Gaughan offers no opinion on California, potentially the richest pot for sports betting with a projected $1.5 billion in total revenue generated and $195 million in taxes. Officials there have been talking about it for three years.
One company that felt the brunt of the California delay was Draft Kings (DKNG). The stock was trading in the low $40s prior to the announcement and sold off sharply to a low of $29.50 in the wake of the legislative delay. Still, with the re-opening of most major sports around the world, Wall Street analysts are forecasting strong growth ahead, seeing revenues doubling over the next 2 ½ years, increasing from $497 million to over $1 billion by year end 2022. This possibility is not lost to investors with DKNG sporting a market cap nearly double the value of MGM Resorts (MGM) and Wynn International (WYNN). Twelve analysts cover the stock, with four strong buys, six buys and two hold ratings. The “street” estimates a price target of $47 for DKNG providing over 25% upside potential. The company recently secured financing its growth plans with a $1.6 billion equity sale with approximately $600 million representing new equity issuance.
Other issues with legalized sports betting must be resolved.
“As of this moment in Congress, there are people trying to outlaw betting on collegiate sports,” Gaughan says. “Between different states with different regulations and different taxes, and some of the leagues wanting a piece of the action and some of the states wanting to give it to them, I see nothing happening soon.
“Always remember, sports betting is not a lottery. It is a very low marginal business. You have to win the money. There are no guarantees. Most states don’t understand this,” he says.
Singular Research Sports Gaming Index
Initial Estimates on Covid Vaccine Leaders
Initial Estimates on Covid Vaccine Leaders
July 28, 2020
Assumptions
- The total addressable market for the Covid vaccine is $280 billion.
- 7 billion people x $20 a shot x 2 shots
- 50% of the Covid vaccine revenue from the company’s corresponding market share is added to the company’s top line.
- We are assuming each company’s percentage share weight of the Covid vaccine.
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Major Market Indicators (MMI) Report July 2020
July 2020 MMI Report
The Big Mo.
While most of our near-term valuation indicators confirm a fairly valued market, technical and sentiment indicators and continued aggressive stimulus from the Fed keep the market in a bullish mode.
Market Sentiment: Bullish
The VIX and VXN registered in the mid 20s to low 30s, showing slightly elevated volatility. At 1.43-to-1, the put/call ratio on the S&P 500 is elevated. The bull to bear ratio scores in at 0.68 and finally, the short interest on the Nasdaq is 3.65 days to cover which is also elevated.
Exhibit 1: VIX 1-Year Chart
Technical Indicators: Bullish
The market shows a healthy expansion, thus becoming more inclusive. New highs to new lows register firmly in the bullish camp at 147 to 9. Last week, the NASDAQ advance/declined volume ratio registered 2,258 up to 1,454 down. The 10-day moving average on up/down volume on the NYSE is mildly positive at 1.2 times while on the NASDAQ, the ratio is much stronger at 1.5 times. Confirming the expansion and showing a broadening of the bull market are five of the six major market indices that are now above their 200-day moving average. The sole laggard is the equal weighted small cap index.
Exhibit 2: SPY 1-Year & 200 Day Simple Moving Average
Liquidity Indicators: Neutral
Powered by two large M&A deals, the Eldorado/Caesars merger and the Chevron takeover of Noble, net inflows ran to a barely positive $1.5 billion. Surprisingly, net outflows from equities were over $20 billion and inflows into bond funds were over $25 billion. Meanwhile, underscoring the heightened aversion to risk, over $4.5 trillion is parked in money market funds, an outsized 13.8% allocation relative to the total market capitalization of current equities. This sidelined cash provides ample fuel to power equity prices higher.
EPS Momentum: Neutral
The chopping block for EPS estimates seems to have reached a trough in Q2. Full year earnings estimates have been reduced by over 25% to $123 for 2020. The S&P PEG ratio scores a 19.96 reading, significantly over the 2.58 reading necessary for a bullish score. EPS is projected to grow over 26% next year.
Valuation: Neutral
The market to replacement cost indicator shows the market is priced at a 20% premium to replacement cost. For this indicator to be bullish, we would need there to be a discount. Currently, total market cap exceeds GDP by 1.53 times. This indicator points to a fully priced market at these levels. However, the EPS yield exceeds the quality corporate bond yield by 78 basis points which is encouraging on a relative basis. Our S&P 500 target based on earnings projections and multipliers, projects an S&P 500 fair value of 3,071, (5)% below the close on July 21.
Monetary Indicators: Bullish
As a result of the historical and aggressive maneuvers by the Fed both in fiscal and monetary actions, our excess liquidity indicator registers a positive 448 basis points. With another round of stimulus being negotiated, liquidity looks to be more than sufficient, thus the adage “do not fight the Fed” appears to be true at this time. Term spread is a positive 48 basis points, showing a bullish upward tilt to the term spread yield curve. High yield bond rates are providing a 512 basis point premium to 10 year Treasuries, a very bullish sign and further showing a modest value available in high yield bonds.
Exhibit 3: U.S. 10-Year Treasury Yield Over 1 Year
In summary, our indicators show a virtual stalemate with the caveat being the extreme stimulus from the Fed, giving the nod to the bulls. In the area of irrelevant annoying information, Jeff Bezos made $13 billion in the market on July 20.
By the way, here are some market election year statistics. Since 1988, the S&P 500 average annual return has been 4.9%. Excluding 2008, the average annual return has been 10.9%. Six of the eight election years have posted positive returns.
Case A = S&P 500 at 3,375
Case B = S&P 500 at 3,568
Robert Maltbie, CFA
Founder and President of Singular Research
818-222-6234(office)
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Covid-19 and the Chorus of Crying Wolves
Covid-19 and the Chorus of Crying Wolves
The U.S. media continues to pound the drum about the outbreak increasing domestically, citing more cases, hospitals approaching capacity, and an uptick in death rates in some locations. However, one can make the argument that the media has an alternative objective of further tarnishing President Trump’s image before the November election. Below, we provide analytical answers to some of the most pertinent questions Americans face today.
With state economies reopening, nation-wide protests across the nation, and an increase in testing, is it unusual to see new cases increasing? Have mortality rates been increasing as well?
During the first three months of the outbreak, only those seriously ill were tested. With testing capacity greatly increased across the nation and the potential imploding of the hospital system greatly reduced, asymptomatic and milder cases are now the order of the day, as nearly 50% of all tests are age 50 or younger. Therefore, it is not unusual to see a higher number of new Corona virus cases. As we will see below, mortality rates have been declining, something that is not regularly in the news.
Every day, Covid-19 figures look astronomical, but how do they compare with the seasonal flu?
Currently, there are 3.3 million total Covid-19 cases and 137,000 deaths. The seasonal flu averages 9 to 49 million cases and 30,000 to 100,000 deaths per year.
The data shows that Covid-19 is proving to be much less lethal than originally thought. A key metric being omitted is percent deaths to new cases which has declined 50% over the last two months. This decline calls into question the fear and panic the media has stoked over an exaggerated expected mortality rate at the onset of the pandemic.
Why are we not hearing about Europe anymore?
In the two worst European countries, only embers of infection levels remain. In Spain, the 7-day moving average for daily deaths peaked at 866 on April 3rd. On July 12, the average is 2. In Italy, the peak was 813 on April 2nd. Today, the average is 14. In Sweden, the 7-day moving for daily deaths peaked at 99 on April 16, now that average is just 4.
By observing Europe and what they have done to contain the spread, we can only hope that America, too, can put an end to the pandemic.For June, we initiated coverage on Meridian Bioscience (VIVO). Meridian is a fully integrated life science company that develops, manufactures, markets, and distributes a broad range of innovative diagnostic products.
Domestically, what is the effect on mortality rates as new cases increase?
As depicted in the charts below, the number of new cases from May 11 to July 11 has increased dramatically. However, the mortality rate from just a two-month window appears to be improving. These results highlight the reasoning previously mentioned that there are currently more tests on younger people who are far less likely to die.
In conclusion, we believe that the Covid-19 pandemic has been over exaggerated by the media. The constant bludgeoning of grim and unsightly deaths from the Corona virus has scared many Americans and disrupted their daily lives. Social distancing and preventative measures should be practiced, but please understand that there are two or more sides to every news story. After the November election, it will be interesting to see how the media portrays the pandemic.
Robert Maltbie, CFA
Founder and President of Singular Research
818-222-6234(office)
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References:
https://www.worldometers.info/coronavirus/
https://www.cdc.gov/flu/about/burden/index.html
https://elemental.medium.com/us-covid-19-deaths-compared-to-diseases-pandemics-wars-2a7495a43280
Singular Research Director’s Letter: June performance 2020
Singular Research Director’s Letter: June performance 2020
In the first half of June, states continued to reopen, but those that reopened early and had relaxed their social distancing guidance faced an exponential increase in new cases and hospitalization rates. On June third, Texas reopened bars, indoor seating at restaurants, and gyms when there was roughly 1,400 new cases per day; however, Texans did not follow correct social distancing habits, leading to the escalation of new cases to nearly 6,000 per day on June 26, which then forced Governor Greg Abbott to again close bars and other businesses that had once reopened. By the end of the month, new cases in Texas had reached 8,000 per day. Other states such as California, Arizona, and Florida have seen dramatic increases in new Corona virus cases. However, new deaths from the Corona virus have not been as pronounced as they were in New York City which leads many to believe that we are now in a new stage of the Corona virus battle.
The June Purchasing Managers Index (PMI®) rebounded to expansion territory, registering 52.6 percent, an increase of 9.5 percentage points from the May reading of 43.1 percent. Similarly, the Conference Board Leading Economic Index® (LEI) increased 2.8 percent in May to 99.8 (2016 = 100), following a 6.1 percent decrease in April and a 7.5 percent decline in March. Although both the PMI and LEI are still in a weak state, investors saw optimism in the results as they showed sequential growth. The unemployment rate fell to 11.1% (13.3% in May) as businesses have started the rehiring process.
For the month of June, the Singular coverage list outperformed the S&P 500 and the Russell 2000 by 232 and 76 basis points, respectively. Year-to-date, the Singular coverage list has underperformed the S&P 500 and outperformed the Russell 2000 by 806 and 127 basis points, respectively. Over the last twelve months, the Singular coverage list has underperformed the S&P 500 and outperformed the Russell 2000 by 851 and 451 basis points, respectively. As new Corona virus cases dramatically increased from states relaxing social distancing measures, markets wavered in June. Investors were enthusiastic over an increase in general economic activity and did not appear to favor one specific sector.
The month of June’s performance was based mainly on positive investor sentiment of economic reopening throughout the United States. All five of our top performers had no major press releases to identify a reason for growth; however, the top five performers are all based in the U.S. and Canada. Investors with long term vision are looking past the Corona virus and are investing in domestic companies like SALM and IEC that will not be affected by further trade tension with China. Furthermore, SA is a safe haven play in case of times of increased economic uncertainty while HBIO and ANIK are investments that are tied to positive outcomes with Corona virus treatments.
ZM, a short position, was our worst performer for the month as the company reported great results with revenue up 169% year-over-year and a 354% increase in new customers. We continue to believe that demand and usage of the ZM platform will wane as the Corona virus fades and other companies enter the cloud-based video communications market. EHTH had a rough month after being a top performer in May. The company issued a report that the average unsubsidized family of four could face average annual deductibles and insurance premiums of $25,000 in 2020, which could lower the demand for EHTH’s product.
For June, we initiated coverage on Meridian Bioscience (VIVO). Meridian is a fully integrated life science company that develops, manufactures, markets, and distributes a broad range of innovative diagnostic products.
We wish to thank our clients for their support and belief in our process. To learn more about Singular Research and register for a 14-day trial offer, please follow the link below.
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Robert Maltbie, CFA
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Top Growth & Value small caps present at Singular Research’s Spring Select Webcall on 5/28
Top Growth & Value small caps present at Singular Research’s Spring Select Webcall on 5/28
At Singular Research, we focus on small and micro-cap stocks that are under covered on Wall Street. These stocks have a niche business model and have yet to be widely discovered. Many of the Corona virus fears in the stock market today do not affect these stocks. Our small-cap Spring Select webinar will focus on top ranked emerging growth, undervalued, and under covered companies that exemplify our research and provide exciting alpha opportunities. Please see below for our conference presenters, the schedule of presentations, and a brief description with valuation metrics on the companies that are presenting.
To register for the webinar on May 28, please follow the link: https://register.gotowebinar.com/register/5157882020359085070
Schedule of Presenting Companies:
6:15 am: NV5 Global Inc. (NVEE) Mr. Dickerson Wright Chairman & CEO
7:00 Luna Innovations Incorporated (LUNA) Mr. Scott A. Graeff Pres, CEO, Treasurer, Sec. & Director
7:45: A-Mark Precious Metals Inc. (AMRK) Mr. Gregory N. Roberts CEO & Director
8:30: IEC Electronics Corp. (IEC) Mr. Thomas L. Barbato CFO & Sr. VP
9:15: Emergent BioSolutions Inc. (EBS) Robert Burrows COO-IR
10:00: Banco Latinoamericano, S.A (BLX) Ms. Ana Graciela de Méndez Exec. VP of Fin. & CFO
10:45: Good Natured Products Inc. (GDNP.V) Mr. Paul John Antoniadis Exec. Chair & CEO
11:15: Harvard Bioscience Inc. (HBIO) Mr. James W. Green Pres, CEO & Chairman
12:00 pm: JMP Group LLC (JMP) Mr. Joseph Andrew Jolson Chairman & CEO
12:45: IRadimed Corporation (IRMD) Ms. Leslie L. McDonnell Pres, CEO & Director
1:30: Singular MMI market strategy report
Luna Innovations Inc. (LUNA)
$9.75 Price Target, Buy, Current Price: $6.10 (5/20/20)
Luna Innovations Inc. develops and markets fiber optic sensing and test and measurement products worldwide. The company has two operating segments. The products and licensing unit sells the company’s commercial fiber optic test and sensing equipment and the technology development segment performs contract R&D for U.S. government agencies.
A-Mark Precious Metals Inc. (AMRK)
$19.00 Price Target, Buy Long-Term, Current Price: $16.49 (5/20/20)
A-Mark Precious Metals (AMRK) is a full-service precious metals trading company offering a wide array of products and services. Products include gold, silver, platinum, and palladium for storage and delivery in the form of coins, bars, wafers, and grain. Services include financing, leasing, consignment, hedging, and a variety of customized financial programs.
IEC Electronics Corp. (IEC)
$11.50 Price Target, Buy, Current Price: $7.62 (5/20/20)
IEC Electronics is a provider of electronic manufacturing services to advanced technology companies that produce lifesaving and mission critical products in the medical, industrial, aerospace, and defense sectors.
Emergent BioSolutions Inc. (EBS)
Price Target Under Review, Buy, Current Price: $88.59 (5/20/20)
Emergent BioSolutions (EBS) is a global specialty life sciences company that develops and commercializes vaccines, drugs and devices that address biodefense threats. The Company is a preferred provider of biodefense products and services to the U.S. government under multi-year contracts. Its most valuable product, BioThrax is the only FDA-approved anthrax vaccine. The Company’s products are sold mainly in the U.S. as well as internationally.
Banco Latinoamericano SA (BLX)
$24.00 Price Target, Buy Long-Term, Current Price: $11.36 (5/20/20)
Banco Latinoamericano a multinational bank, primarily engages in the financing of foreign trade in Latin America and the Caribbean. The company operates through two segments, Commercial and Treasury.
Good Natured Products (GDNP.V)
$0.27 Price Target, Buy Long-Term, Current Price: $0.16 (5/20/20)
Good Natured Products Inc., formerly Solegear, is an award-winning, publicly traded bioplastics company founded in 2006 and based in Vancouver, British Columbia, Canada. Good Natured is an innovator in the field of next generation bioplastics made from annually renewable plant-based sources.
Harvard Bioscience (HBIO)
$4.00 Price Target, Buy, Current Price: $2.68 (5/20/20)
Harvard Bioscience (HBIO) develops, manufactures, and markets scientific equipment, systems, and consumables that are used by thousands of researchers worldwide. The Company was founded in 1901 by a Harvard Medical School professor and has grown through a combination of new products and acquisitions. HBIO is headquartered in Holliston, Massachusetts and has sales and/or manufacturing operations in the U.S. and Canada, the UK, Germany, Sweden, France, Spain, and China.
JMP Group LLC (JMP)
$6.00 Price Target, Buy, Current Price: $2.73 (5/20/20)
JMP Group is a diversified financial services company. The company’s main lines of business consist of a broker-dealer and investment bank focused on the middle market, and asset management subsidiaries focused on alternative investment strategies and a corporate credit manager.
IRadimed Corp. (IRMD)
$30.00 Price Target, Buy, Current Price: $21.29 (5/21/20)
Iradimed develops, commercializes, and markets MRI-compatible medical devices that can be used safely on patients undergoing MRI procedures. The Company markets MRI-compatible IV infusion pumps that monitors patient’s vital signs and has plans to introduce a magnetic detection device in 2019 for MRI scanner rooms. The Company makes sales directly in the U.S. and through distributors internationally. Iradimed has an installed base of over 5,000 infusion pumps and more than 260 patient vital signs monitors.
NV5 Global, Inc. (NVEE)
$94.00 Price Target, Buy, Current Price: $44.80 (5/21/20)
NV5 Global, Inc. is a provider of professional and technical engineering and consulting solutions in the infrastructure, energy, construction, real estate, and environmental markets. The Company’s clients include the U.S. federal, state and local governments, and the private sector.
For a complimentary research report on any of these companies mentioned, please e-mail This email address is being protected from spambots. You need JavaScript enabled to view it. or call 818-222-6234. Thank you.
Singular Research’s Institutional 1-on-1 Webinar on 6/25
Singular Research’s Institutional 1-on-1 Webinar on 6/25
As states and economies around the world reopen, the S&P 500 and Russell 2000 have increased 39% and 42% off their March 23rd lows. Both large and small cap stocks have made a tremendous comeback, but small cap stocks appear to have more room to the upside given their undervaluation compared to large cap stocks.
At Singular Research, we focus on small and micro-cap stocks that are undercovered on Wall Street. These stocks have a niche business model and have yet to be widely discovered. Many of the Corona virus fears in the stock market today do not affect these stocks.
Our 1 on 1 Institutional Webinar highlights four companies that have either been shielded from the negative effects of the Corona virus or have benefitted from such an uncertain time. Please see below for our webinar 1 on 1 schedule and a brief description with valuation metrics and growth catalysts of the companies that will be in attendance.
To register for the webinar on June 25, please follow the link:
https://register.gotowebinar.com/register/8885806981336621323
Schedule of Companies (PDT):
- 7:00 AM - 9:00 AM: Luna Innovations Inc. (LUNA), Scott A. Graeff, President & CEO
- 9:00 AM - 11:00 AM: NV5 (NVEE), Alex Hockman, President & COO and Ed Codispoti, CFO
- 11:00 AM - 1:00 PM: The Rubicon Project, Inc. (RUBI), Nick Kormeluk, CIRO
- 1:00 PM - 3:00 PM: Good Natured Products Inc. (GDNP.V), Paul John Antoniadis, Executive Chair & CEO
- 3:00 PM - 5:00 PM: Manufactured Housing Properties Inc. (MHPC) , Michael Z.Anise, President
Luna Innovations Inc. (LUNA)
$9.75 Price Target, Buy, Current Price: $6.31 (6/16/20)
Luna Innovations Inc. develops and markets fiber optic sensing and test and measurement products worldwide. The company has two operating segments. The products and licensing unit sells the company’s commercial fiber optic test and sensing equipment and the technology development segment performs contract R&D for U.S. government agencies.
In their first quarter, the company delivered its tenth successive quarter of double-digit revenue growth. So far, the COVID-19 pandemic has had a minor impact on LUNA’s operations. Management reiterated its FY:20 outlook, although guidance will now trend towards the lower end of the earlier range. We maintain our BUY rating and our target price at $9.75 per share.
A-Mark Precious Metals Inc. (AMRK)
$19.00 Price Target, Buy Long-Term, Current Price: $17.45 (6/16/20)
A-Mark Precious Metals (AMRK) is a full-service precious metals trading company offering a wide array of products and services. Products include gold, silver, platinum, and palladium for storage and delivery in the form of coins, bars, wafers, and grain. Services include financing, leasing, consignment, hedging, and a variety of customized financial programs.
The company reported strong Q3:20 results, delivering net income higher than any fiscal full year period since being public. Higher economic uncertainty due to the COVID-19 pandemic is beneficial for the company as AMRK tends to be more profitable in times of volatility. We increase our price target to $19.00 (earlier $10.00) and maintain our rating at BUY-Long-Term.
The Rubicon Project, Inc. (RUBI)
$9.50 Price Target, Buy, Current Price: $7.32 (6/16/20)
RUBI provides a technology solution to automate the purchase and sale of digital advertising inventory. Sellers (which include websites or mobile apps) provide digital advertising inventory to RUBI’s platform in the form of advertising requests. These ad requests from sellers are sent to buyer, which can then place bids on them.
Q1:20 results were below management’s stated guidance which was negatively impacted by COVID-19. Q2:20 guidance is a touch lighter implying flat sales growth at the mid-point of their guidance. While near-term concerns remain a headwind, we are optimistic on their long-term prospects, especially with the entry in the CTV market after their acquisition of Telaria. We lower our target price to $9.50 (earlier $14.00) and maintain our BUY rating given the upside potential.
Good Natured Products (GDNP.V)
$0.27 Price Target, Buy Long-Term, Current Price: $0.14 (6/16/20)
Good Natured Products Inc., formerly Solegear, is an award-winning, publicly traded bioplastics company founded in 2006 and based in Vancouver, British Columbia, Canada. Good Natured is an innovator in the field of next generation bioplastics made from annually renewable plant-based sources.
For a complimentary research report on any of these companies mentioned, please e-mail This email address is being protected from spambots. You need JavaScript enabled to view it. or call 818-222-6234.
Thank you.
Century Casinos Inc. ( CNTY) Partners With Circa Sports Throwing Down The Gaunlet In US Sports Gaming Market
Century Casinos Inc. ( CNTY) Partners With Circa Sports Throwing Down The Gaunlet In US Sports Gaming Market
Summary
Partnership with Circa improves long term growth profile.
All casinos now reopened.
Stock is attractively priced relative to industry group comps.
Data by YCharts
Looking to rebound from a $45.9 million first-quarter loss delivered by the coronavirus pandemic, Century Casinos (NASDAQ:CNTY) reopened five gaming properties in Canada as of June 13, following casino openings in Missouri and West Virginia, while plans to reopen two casinos in Colorado came to fruiation June 15.
Headquartered in Colorado Springs, Colo., Century Casinos (CNTY) has pleased most shareholders, returning 32 percent on investment over the last three years, though earnings per share have disappointed analysts and shareholders would like to see CEO salary more in line with the median.
In April, Century partnered with Las Vegas-based Circa Sports to bring internet sports gambling to Colorado. The 15-year agreement with Circa creates a strategic opportunity for added revenue as online sports betting is projected to surge to $20 billion by 2024. Terms of the deal include a market access fee, share of net gaming revenue and minimum revenue guarantee payable to Century each year.
Circa Sports ( privately held) Chief Executive Officer Derek Stevens said his team “simply hit it off” with Century’s management team, and he felt the companies were a good fit for each other.
Stevens, who owns Golden Gate and The D casino-hotels in Las Vegas and is developing the Circa hotel, sees Colorado as an ideal place to expand his sports betting footprint outside of Nevada. Colorado voters in November approved legislation for sports wagering to start May 1.
“The market question is still to be determined as there are a wide range of projections for Colorado, but we think Circa Sports will assume a solid position within the Colorado market,” Stevens said.
Century and Circa submitted applications with the state of Colorado to obtain necessary licenses before May 1. The Circa Sports TM Mobile sports betting app, which launched in May, will operate in association with one of Colorado’s master licenses for sports wagering held by Century Casinos subsidiaries.
Circa is certainly interested in partnering with other gaming properties throughout the United States, depending upon a favorable regulatory environment, Stevens said.
Competitive strategy
With its tagline, “Where the Pros Play,” Circa intends to find a unique niche in Colorado, even as it competes with betting platforms such as DraftKings (DKNG) and FanDuel, which currently operate in several states that offer legalized online sports wagering.
“We plan on taking larger limits than most, similar to what we do in Nevada,” Stevens said. “We will also offer some unique products such as cross-sports parlays, something that has been extremely popular in Las Vegas.”
There is growing speculation that more states will legalize online sports gambling to replenish coffers that were drained by the economic shutdown brought on by the virus. Legislators will be looking at every possible revenue source following the pandemic, Stevens believes.
“Sports wagering is still in its infancy in the United States,” he said. “The percentage of states that will allow sports wagering will continue to increase in the next 24 months.”
Reopening casinos
Century Casinos Co-CEO Peter Hoetzinger said the company was hoping to reopen its casinos in Cripple Creek and Central City, Colo., in mid-June, but that has yet to happen. Century also owns casinos in Missouri, West Virginia, Canada, Poland and England. It operates pari-mutuel off-track horse betting networks in Alberta, Canada.
The company in May opened its eight casinos in Poland, and resumed operations in June at casinos in Edmonton, St. Albert and Calgary, Alberta, as well as Century Mile Racetrack and Casino and Century Downs Racetrack.
Prior to reopening, Century Casinos implemented comprehensive sanitizing and social distancing protocols based on Alberta Health Services guidelines and newly established industry standards.
In its May 20 first-quarter earnings report, Century reported net operating revenue and EBITDA were negatively impacted by the company’s acquisition of Mountaineer Casino and Racetrack, Century Casino Cape Girardeau and Century Casino Caruthersville in Missouri.
The COVID-19 pandemic crushed first-quarter operations, which included a $33 million impairment of goodwill and casino licenses.
“During these unprecedented times, our primary focus is the health, safety and well-being of our team members, guests and communities,” Century Casinos Co-CEOs Erwin Haitzmann and Peter Hoetzinger commented in the earnings report.
“Through the end of February, we were encouraged by the strength of our operations and the significant growth in net operating revenue and adjusted EBITDA driven in part by our recent acquisition of properties in Missouri and West Virginia. We look forward to reopening our properties and we plan to meet or exceed all safety requirements set forth by health officials.”
Improved growth outlook
Century’s strategic partnership with Circa may be leveraged to include all present and future US properties , subject to state approvals, combined the recent strategies acquisition of properties from El Resorts Inc. (ERI) creates a attractive investment opportunity in CNTY.
Century Casino (CNTY) trades at lower price to book value .88 vs 2.56 and lower price to sales ratio at .66 to1.47. than the casino/resort industry group. Current Wall Street mean estimates call for 25% long term eps growth and a twelve-month price target of $7.75.
Disclosure: I am/we are long CNTY. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.
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