Why This Analyst Sees A 250% Upside Potential For MeetMe Shares

Blake Harper of Wunderlich on Tuesday reiterated a Buy rating on shares of micro-cap MeetMe Inc (NASDAQ: MEET) with a $4.50 price target following the company achieving a “milestone” of serving 1.1 million mobile daily active users.

MeetMe is a social network discovery app that allows users to meet new people. The company monetizes the service through advertising and virtual currency.

According to Harper, if the company is able to maintain its 1.1 million user base, this could translate to over $1 million in higher mobile revenues. The analyst notes that his research concludes that the company is seeing record chat activity that could suggest shares are undervalued.

Harper estimates the company should be able to post $25 million in mobile revenues in fiscal 2014, up approximately 100 percent year-over-year. Looking forward, the analyst sees an additional revenue growth of 50 percent year-over-year to $38 million.

“We believe the company is positioned for better mobile revenue growth in FY15 compared to our estimate of up 50 percent year over year and that the stock is undervalued at 1x EV/S, 5x EV/EBITDA, and 6.5x P/E on our FY15 estimates, growing 18 percent, 107 percent and 121 percent year over year, respectively,” Harper concluded.