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J.P. Morgan analyst Samuel Nielsen reiterated the Overweight rating on Sportradar Group AG (NASDAQ:SRAD) on Wednesday, raising the price forecast to $27 from $26.
The analyst highlights that Sportradar is effectively using its scale, data, and technology capabilities to enhance its products and services, which, in turn, helps increase pricing power and take rates.
Nielsen is optimistic about the company’s ability to leverage sports data rights to innovate products and increase pricing power, particularly in live betting.
This is expected to drive higher revenue share and margin expansion, as the company moves past recent rights renewals and enters a period of sustained top-line growth with lower operating expenses, the analyst adds.
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With a solid visibility into its revenue and cost structure, Sportradar has approximately €2 billion ($2.2 billion) in contracted revenue for the next two years, accounting for around 75% of the company’s projected revenue for 2025 and 2026, a reassuring figure given the broader concerns about consumer health, Nielsen writes.
Looking ahead to 2027, Sportradar has set ambitious financial targets, including a revenue forecast of about €1.7 billion, reflecting a 15% compound annual growth rate (CAGR), and an adjusted EBITDA of approximately €455 million, showing a 27% CAGR and a margin improvement of 700 basis points to reach 27%, the analyst highlights.
Additionally, the company expects around €275 million in free cash flow, equating to a conversion rate of about 60% of EBITDA into free cash flow. SRAD’s growth projections for 2027 are driven by global market growth, cross-selling and up-selling strategies, and expansion into adjacent markets.
On the cost side, Sportradar anticipates a 9% CAGR in sports rights expense and a 10% CAGR in sports rights cash costs, which should provide approximately 400 basis points of margin leverage, with another 300 basis points from fixed cost leverage.
The analyst keeps 2025 estimates steady but increases 2026 revenue and EBITDA projections by 2% and 3%, raising them to €1.45 billion and €360 million, respectively, from previous estimates of €1.43 billion and €349 million.
Price Action: SRAD shares are trading higher by 1.98% to $22.16 at last check Wednesday.
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Latest Ratings for SRAD
| Date | Firm | Action | From | To |
|---|---|---|---|---|
| Jan 2022 | Morgan Stanley | Downgrades | Overweight | Equal-Weight |
| Nov 2021 | Needham | Maintains | Buy | |
| Oct 2021 | UBS | Initiates Coverage On | Buy |