Mogo Analyst Price Target Raised Again on Back of Blockchain and Q3 Earnings Announcement

Mogo Analyst Price Target Raised Again on Back of Blockchain and Q3 Earnings Announcement

Mackie Research Capital’s Nikhil Thadani just raised his analyst price target for Mogo Finance Technology Inc. (TSX:MOGO)( OTCQX: MOGOF), one of Canada’s leading fintech companies, from $9 to $12 per share after Mogo announced their Q3 2017 results and the addition of Blockchain technology to their platform.

Mogo currently trades at under $6 per share, which means the analyst expects the share price of Mogo to double.

Here are the highlights of the analyst report by Mackie’s Nikhil Thadani:

  • Mogo trades at <2x net sales vs. FinTech names at ~4x on a 2019 basis.
  • Q3 commentary last night suggested Mogo’s platform play is emerging, based on the company’s product roadmap and expected increased pace of product launches.
  • Firstly, Mogo is targeting to ~double (at upper end of guidance) its member base to ~800K – 1 mln by the end of Q4/18 vs. our previous ~610K estimate. Additional offline partnerships could help in this regard.
  • Secondly, Mogo intends to generate ~50% of Q4/18 net revenue from fee based products, which are less capital intensive; when we launched coverage in April, we expected ~40% by Q4/18.
  • Management indicated that the company has nine additional products in its near-term roadmap in addition to Mogo Protect (Q4 launch) and Crypto wallet (Q1 launch).
  • Product launches could include major enhancements e.g. crypto wallet (potentially tied to Mogo’s prepaid card) and smaller features such as rewards program with Mogo’s prepaid card.
  • An AML/KYC compliant crypto wallet, tied to a prepaid card, could fill a meaningful need.
  • For example, Coinbase, the leading exchange/wallet limits Canadians’ weekly purchases to ~$100 (on a credit card), with no easy mechanism to withdraw funds and nearly non-existent human customer support.
  • A richer product offering could aid Mogo’s evolution to a true platform play, with various features and lower cost of customer acquisition (roadblock for young Fintechs).
  • Our new $12/sh price target reflects ~3.5x net 2019 revenue. Recall, we exclude funding debt from net debt and account for loan book interest revenue net of funding interest expenses.
  • If the company can execute on new fee based product initiatives outlined last night during 2018, we see upside over ~$15/sh (based on a 2019 valuation inline with Fintech stocks).

For more information on Mogo’s Analyst Report by Mackie Research Capital, please contact them direct.


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