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Is CAT about to purr?

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Question asked 19/11/2021

Is CAT about to purr?

Hi Team,

I am wanting to know the teams thoughts in relation to CAT – Catapult. I believe this could be a re-opening stock that may grow well once all sports are back. At present they did a Capital raise at 1.90 to fund the acquisition of London-based SBG Sports Software, increasing shares in issue. Do you believe this acquisition significantly adds to its business opportunity? Per market update on 21 Oct 2021 they had “strong performance against its key SaaS metrics, the Company is well positioned financially with $42.1 million of cash at bank as at September 30, 2021, an increase of $19.9 million over the previous six months. As vaccination rates have climbed, sports have returned so why the current share price weakness now 1.65 ? Is this a Buy now or wait for a better entry?

Derek F

Answer

Hi Derek,

The sports analytics company has struggled over the last 5-years, not just since COVID. However their largest vertical, performance and health grew over 30% for the half-year and its churn rate fell by over 40%. The company now has over $US42m cash at the bank and with the North American market strengthening things look better for CAT, we like the stock around the $1.50 level – a market cap of $361m doesn’t feel too challenging in our opinion, however worth noting that brokers that follow this stock are very divided. Evans & Partners are bulls with a $4.38 PT, however Bells which have been a big supporter of the stock over many years recently downgraded their expectations and now have a $1.75 PT and hold, the issue being around lower margins which were identified at a recent investor day.

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Catapult Group (CAT)

LAST UPDATED 19/11/2021 16:12

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