One Small-Cap Communication Services Stock to Watch for – BBTV

BBTV Holdings Inc. (TSX: BBTV) is a Canada-based media and technology company that provides an end-to-end management distribution, and monetization of content. The company’s revenue originates from advertising, direct Ad sales, content management, and mobile gaming apps.

Key highlights

• Fading financials: During 9MFY21, the company reported an increase in its Net loss to CAD 23.81 million as compared to the net loss of CAD 0.98 million in the pcp. During the reported period, the Adjusted EBITDA of the company fell to CAD 7.86 million vs against of CAD 4.16 million in the 9MFY20.

• Decline in cash flows from operations: For the 9MFY21 the cash flows used in operations increased to CAD 4.37 million, from the cash flows used in the operations of CAD 0.32 million in the pcp. On a positive note, for Q3FY21, the group reported positive cash flows from the operation of CAD 10.27 million vs negative cash flows of CAD 0.07 million in Q3FY20.

• Deteriorating profitability margins: For Q3FY21, the group has reported a weaker set of profitability metrics as compared to the industry median. The company’s gross margins declined to 1.6% in Q3FY21 as compared to the industry median of 53.1%. For the similar period, the EBITDA margin turned to a negative of 2.1% vs the EBITDA margins for the industry median of 13.30%. The biggest decline was recorded in the operating margins, which turned to negative 10.1% vs the operating margins for industry median of 5.7%.
  

        Source: Refinitive, Analysis by Kalkine Group

• Distorted chart patterns: Since the stock started trading on the TSX, the prices have declined after forming the highs of CAD 16.0 during October 2020. The stock has formed lower lows and lower highs since then, representing a bearish pattern, and recently touched the lifetime lows of CAD 1.92 in March 2022. Off late, the stock showed some upward bias and somehow managed to cross the 50 DMA of CAD 2.62, which is the first crucial hurdle for the prices to move towards the North.

• Upcoming results: The company will release its financial results for the Q4FY21 along with FY21, on March 29, 2022.
  

Stock recommendation 

The stock delivered a positive return of 19.41% in the past one month and a negative return of -45.39% in the past six months. The group has posted increased losses during the 9MFY21 of CAD 23.81 million as compared to the net losses of CAD 0.98 million in the previous comparable period. Recently, the company came with strong revenue numbers of CAD 113.28 million for Q3FY21, which were absent during Q3FY20. On the business front, the company executed its strategic plans by signing contracts with the world's top content creators who will help the group in enhancing the library content, viewership, and monetization in near future.

The stock found the grounds around CAD 3.0 for the near term and it's worth watching how long the prices can sustain above the 50 DMA. The stock can further gain traction once the prices cross the 200DMA and manage to stay afloat at those levels

Therefore, based on the above rationale and technical analysis, we recommend a “Watch” rating at the last closing market price of CAD 3.26 on March 23, 2022. Additionally, the markets are trading in a highly volatile zone currently due to certain macro-economic issues and geopolitical tensions prevailing. Therefore, it is prudent to follow a cautious approach while investing.

One-Year Technical Price Chart (as on March 23, 2022). Source: REFINITIV, Analysis by Kalkine Group

Technical Analysis Summary

Investors can evaluate the stock based on the support and resistance levels provided in the report in case of keen interest taking into consideration the risk-reward scenario.

Disclaimer

The advice given by Kalkine Canada Advisory Services Inc. and provided on this website is general information only and it does not take into account your investment objectives, financial situation and the particular needs of any particular person. You should therefore consider whether the advice is appropriate to your investment objectives, financial situation and needs before acting upon it. You should seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice) as necessary before acting on any advice. Not all investments are appropriate for all people. The website www.kalkine.ca is published by Kalkine Canada Advisory Services Inc. The link to our Terms & Conditions has been provided please go through them. On the date of publishing this report (mentioned on the website), employees and/or associates of Kalkine do not hold positions in any of the stocks covered on the website. These stocks can change any time and readers of the reports should not consider these stocks as advice or recommendations later.