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Investing.com - Canaccord Genuity initiated coverage on Zoo Digital Group PLC (LON:ZOO) with a Buy rating and a price target of GBP0.22.
Zoo Digital provides localization and digital media services to major Hollywood studios and streaming platforms seeking to distribute content globally across different territories, languages, and platforms.
The company experienced strong growth before the Hollywood strikes, with revenues increasing from $29.8 million in FY20 to $90.3 million in FY23, generating $8.0 million in free cash flow that year.
Despite industry-wide disruption over the past two years, Zoo Digital has shifted a significant portion of its cost base to India and reported its second-highest gross margin in FY25, even with substantially lower revenues.
Canaccord Genuity notes that Zoo Digital shares currently trade at just 0.3x FY26E EV/Sales, reflecting what it sees as extreme market pessimism about the company’s cash burn, potentially overlooking recovery prospects if streaming content production returns to normal levels.
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