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Why This Analyst Is Bullish On Chicken Soup For The Soul

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Why This Analyst Is Bullish On Chicken Soup For The Soul

Chicken Soup for The Soul Entertainment Inc (NASDAQ: CSSE) describes itself as a provider of "positive and entertaining video content that brings out the best of the human spirit." Research firm DA Davidson initiated coverage of the stock with a bullish rating, noting the company's ability to generate advertising revenue.

The Chicken Soup Analyst

Tom Forte initiated coverage of Chicken Soup's stock with a Buy rating and $26 price target.

The Chicken Soup Thesis

Chicken Soup is considered to be a "premier" advertising-based-video-on-demand (AVOD) service through a joint venture with Sony called Crackle, Forte wrote in the note. This positions the company to expand sales at a 47.6% compounded annual growth rate over the next three years as the company expands its video offerings through M&A deals. Over the same three-year time period, adjusted EBITDA margin is likely to expand by 747 basis points to 14.3% and reach 25% by the end of 2029.

One of the company's biggest strengths is its ability to leverage "social selling" -- that is selling directly through its social media presence. The company has a strong presence, including 2.2 million followers on Facebook, 95,800 followers on Instagram and 25,000 on Twitter. Forte said the company's job of portraying a positive and upbeat lifestyle should at the very least grow awareness for its original content.

Other catalysts to help support growth over the coming years include:

  • International expansion as the company operates in 56 markets but international revenue accounted for around 1% of revenue for each of the three months in the third quarter.
  • Continued growth and expansion in mobile usage, especially after 5G network penetration would translate to an increase in download capacity and reduced latency.

CSSE Price Action

Shares of Chicken Soup for The Soul were trading higher by more than 6.4% Tuesday at $10.

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Latest Ratings for CSSE

DateFirmActionFromTo
Feb 2020DA DavidsonInitiates Coverage OnBuy
Nov 2019BenchmarkMaintainsBuy
Oct 2019National SecuritiesInitiates Coverage OnBuy

View More Analyst Ratings for CSSE
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