monsitj
Oppenheimer thinks Genius Sports Limited (NYSE:GENI) is the best option for small-cap investors to play the U.S. sports betting growth theme.
Analyst Jed Kelly said Genius Sports (GENI) is firmly entrenched as a main player in the U.S. online sports betting landscape after extending its National Football League and Football DataCo partnerships into 2028 and 2029, respectively. Crucially, Genius Sports (GENI) is highlighted as not being exposed to the rapid online market share consolidation from DraftKings (DKNG) and FanDuel (FLUT) that is weighing on other small-cap stocks in the U.S. sports betting space.Kelly also pointed out that a key overhang was removed from the stock after Genius Sports (GENI) announced that Gabriele Cipparrone, partner at Apax Partners LLC, resigned from the company’s board of directors following Apax Funds’ 10M sale of stock. That sale reduced Apax Funds’ GENI ownership to ~21.3M shares, or slightly less than 10% of shares outstanding. Kelly and the Oppenheimer analyst team think the APAX wildcard has been draggin on GENI shares since the Q4 earnings report, when management provided initial 2024 guidance that reflected 40% EBITDA growth, free cash flow inflecting to positive, and potential upside from an upcoming OSB renewal cycle. The Apax transaction is expected to remove a sponsor distraction, improve float/liquidity, and refocus investors back to the solid fundamentals being displayed.
Genius Sports (GENI) is well-liked on Wall Street in general. Notably, 9 out of 10 sell-side firms covering Genius Sports (GENI) have a Buy-equivalent rating in the stock. Seeking Alpha analyst Tech and Growth also issued a bullish appraisal recently.
Looking ahead, Genius Sports (GENI) said it expects to generate group revenue of approximately $480M in 2024 and group adjusted EBITDA of approximately $75M. Notably, Genius Sports (GENI) also expects to generate positive cash flow for the full year. Analysts expect Genius Sports (GENI) to be close to EPS break-even in 2025 and show positive EPS in 2026.
