Sportradar Stock Has More Upside Ahead Says Analyst
- 12 Feb 2025
- Gambling News
Shares of Sportradar (NASDAQ: SRAD) are experiencing a robust surge, climbing nearly 15% in the last month and 24% since the beginning of 2025, but at least one analyst thinks the soaring stock still has further gains in store.
In a recent report to clients, Deutsche Bank analyst Steven Pizzella maintained a “buy” rating on the sports betting data provider, raising his price target to $24 from $19. This suggests an increase of roughly 13% from Tuesday’s closing price.
“Overall, we continue to believe SRAD gives investors, who are interested in gaining long-term exposure to the rapidly growing sports betting industry, a pure-play way to get leverage to the theme, through a profitable and majority subscription-based (~70% of revenue), business-to-business (B2B) operating model,” writes Pizzella.
In other words, Sportradar and competitor Genius Sports (NYSE: GENI) supply data services to sportsbook operators and do not interact directly with bettors. Consequently, they are more technology-oriented than consumer cyclical firms, offering investors a degree of protection from frequently fluctuating discretionary spending patterns.
Sportradar Shares Have Potential for Growth
Following a prolonged period of trading primarily sideways, Sportradar stock has more than doubled in the last year and is currently at its highest point since October 2021.
There are two points that may suggest there's additional potential for growth. Initially, the shares are trading at a lower price than they did shortly after the initial public offering (IPO) in September 2021. Additionally, the market capitalization of the company stands at only $6.34 billion, suggesting significant potential for expansion.
Notably, Sportradar is a financially robust narrative due to its solid balance sheet and clear earnings and revenue outlook from its long-term agreements with clients.
“Given; 1) one of the strongest growth profiles within our coverage universe, (~20% 3-year adjusted EBITDA CAGR), 2) a strong balance sheet, in a net cash position, 3) increased operating leverage in the out years, 4) key long term contracts, locked in for approximately six plus years on average, and 5) a reasonable valuation, when looked at in terms of SRAD’s growth prospects and comps, we reiterate our Buy rating,” adds Pizzella.
Regarding Sportradar Agreements ...
Sportradar holds long-term agreements with prominent professional sports leagues such as the Bundesliga, Major League Baseball (MLB), the NBA, NHL, and UEFA. The firm has just revealed an extension of the MLB contract, prolonging the deal until 2032. A few of those leagues are also equity investors in Sportradar.
The transparency suggests that there is low contract risk for the coming years, enabling Sportradar to concentrate on additional growth prospects, observes Pizzella.
“Remember, sports rights are amortized on a straight-line basis, over the life of each contract, so there is enhanced visibility into a big portion of the cost basis moving forward and the opportunity to drive incremental operating leverage,” concludes the analyst. “In addition, we note, given SRADs growth, size, and scale, we believe SRAD will be competitive to renew these contracts at accretive terms and will be in a strong position to bid on new contracts.”
