Macquarie Equity Research initiated coverage on Genius Sports (GENI) with an Outperform rating and a 12-month price target of $11.00 on the stock.
“We think Genius Sports, a $1.5bn market cap Sports Tech company, has been and will continue to be a critical driver of sports fan engagement and values for sports leagues/teams, which have doubled in the past five years.” Wrote analysts at Macquarie in a note.
Macquarie expects the North America Online Sports Betting (OSB) market to grow by 24% annually until 2026, reaching $22 billion in revenue. GENI is likely to grow even faster in North America due to increased event use, new products, and more in-game betting.
Genius became the sole distributor of NFL data in 2021, which should boost betting revenue and create more advertising opportunities. With GENI's stable business, they could generate over $70 million in Free Cash Flow by 2025 and surpass $120 million by 2026.
Macquarie believes the company’s growth could accelerate further by focusing on NFL in-play betting and introducing new products like BetVision, leading to increased advertising revenue.
Macquarie predicts that between 2023 and 2026, GENI will see revenue growth at a CAGR of 17%, with a substantial increase in EBITDA at a CAGR of 50%.
This projection is based on the anticipation of GENI capitalizing on increased operating efficiency as more US states legalize online sports betting, leading to a shift in bettor behavior towards more in-play action.
Shares of GENI are up 0.81% in early trading on Thursday.