If you have a high risk tolerance and would like some exposure to the small side of the market, then Catapult Group International Ltd (ASX: CAT) shares could be worth considering.
That's the view of analysts at Bell Potter, which are feeling very positive about this sports technology company.
According to a note from this week, the broker has retained its buy rating on the small cap ASX share with an improved price target of $1.20.
Based on the current Catapult share price of $1.05, this implies potential upside of 14%.
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What is Bell Potter saying about this small cap ASX share?
Bell Potter was pleased with Catapult's recent full-year results release and believes that there's more to come in FY 2024. Particularly given its belief that the video side of the business could be about to take off again thanks to some market-leading technology. It commented:
The key take-out perhaps of last week's Catapult FY23 result was that Wearables (Performance & Health) continues to grow strongly (revenue up 17%) while Video (Tactics & Coaching) continues to lag (revenue up 5%).
This could be about to change, however, with the continual development of an advanced video analysis or insights tool – called MatchTracker – which looks to be well ahead of the competition and importantly can access data from third party video providers (including Hudl).
The broker believes this technology could be the key to the company expanding its footprint outside of the markets it already dominates. It adds:
In our view this could be the differentiated product that helps Catapult gain a foothold in sporting leagues outside of the two it currently dominates in video (NFL and NHL). We believe MatchTracker will help return Tactics & Coaching to double digit percentage growth in FY24 and for the foreseeable future. This will be supported by anticipated continued strong growth in SBG and potentially also the release of updated video editing and/or publishing tools over the next year or two.
All in all, Bell Potter believes this will underpin revenue of $96.2 million and underlying EBITDA of $8.7 million in FY 2024 and then $109.2 million and $14.4 million in FY 2025. This will be up from $84.4 million and -$3.2 million in FY 2023.
It concludes:
We continue to forecast low to mid teens top line growth for the next three years which is driven by forecast double digit growth in both Performance & Health (Wearables) and Tactics & Coaching (Video). We also forecast a return to positive EBITDA – both statutory and underlying – in FY24 and then strong double digit growth in FY25 and FY26. We also forecast a return to positive free cash flow in FY24 – consistent with the company guidance – and see no need for a capital raising.
