Shares of Sportradar stock rose 11 percent following the company’s disclosure of its fourth-quarter numbers to Wall Street. One investment firm, Deutsche Bank, lifted its SRAD price target to $13 a share and reiterated a “Buy” rating on the stock.
Sportradar came in ahead of Wall Street’s consensus for where its fourth-quarter results would land. In addition, the company announced a $200 million stock buyback and prospects for increased margins ahead.
Fourth-quarter revenue for Sportradar was €252.6 million, a 22.4 percent improvement from the year before. Both U.S. activity and international wagering drove the outperformance. Cash flow was €39.5 million, a 12.6 percent increase from 4Q22.
Looking into the future, Sportradar executives predicted cash-flow increases of “at least 20 percent year over year,” while sticking with their previous revenue guidance. That would translate to just over $1 billion in revenue this year.
The company also gave Wall Street a peek into its costs, saying that sports rights would consume 30 percent of 2024 revenue, driven by National Basketball Association and ATP fees. This would translate into a cost of €315 million. “Management noted they expect to increase operating leverage moving forward, with longer-term visibility now on sports-rights costs,” observed Deutsche Bank analyst Steven Pizzella.
Given those rights costs and ongoing leverage, margins were projected to be 15 percent in the current quarter and in the low 20s going forward. As for the stock repurchase, Pizzella wrote, “We view the authorization as a positive, given SRAD’s balance-sheet capacity, in a net-cash position, and longer-term growth prospects.
“Overall,” Pizzella resumed, “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 … B2B operating model.”
He hailed Sportradar for the strength of its growth profile, its cash on hand, its balance sheet, and its “reasonable valuation,” among other factors.
