Genius Sports given a 'Purchase' recommendation in fresh Deutsche Bank evaluation
Posted: April 21, 2025, 11:28a.m.
Last Updated: April 21, 2025, 11:50a.m.
@etfgodfather Takes a Swing at Genius Sports (NYSE: GENI)Stock positioned to weather "macro storm" brewing in gaming sector
Let's be real, folks, the stock market ain't a walk in the park these days. But if you're looking for a gaming equity that could stand its ground against the turbulent waves, Deutsche Bank thinks Genius Sports (GENI) could be your ticket.
Last Monday, they slapped a "buy" rating on the sports betting data provider and set a price target of $12—that's a potential 20% gain from where it's at now and 16% from the close on April 18. Now, that's what I call jumping on a promising ride.
Analyst Steven Pizzella stressed that Genius is a shrewd play for investors looking to brace against the golf ball-sized macroeconomic headwinds currently battering the broader gaming space.
"GENI's a defensive choice for investors seeking a buffer against the storm brewing in the gaming sector," Pizzella writes in his client report.
With more analysts hopping on the GENI hype train, there's 13 on board now, and all but one have given it the "buy" sign. Their average price target? $11.50.
So Why's Genius a Smart Move?
Think about it, my dudes. With Genius, you ain't tethered to the consumer-facing front of the sports wagering game. Nah, instead, it caters to gaming companies, who shell out a fixed fee for Genius' real-time data and services, regardless of the betting volume. Brilliant, right?
That's particularly relevant when some punters might be cutting back on bet sizes or frequency due to shaky stock markets and a slumping economy. No worries, Genius' revenue stream is as predictable as Captain Ahab chasing Moby Dick.
"We reckon GENI's got limited downside risk compared to peers in a recession," Pizzella observes, "thanks to that fixed revenue stream and a variable one that's less prone to economic swings, since Genius clients don't have to drop cash on cars, planes, hotels, or theme parks."
Genius has also shown promising growth projections, with Pizzella tipping them to post a high-teens CAGR (Compound Annual Growth Rate) over the next three years. Last month, they further announced a forecasted 21% boost in 2025 revenue.
Genius' Financial Muscles Can Carry the Load
But wait, there's more! GENI's balance sheet makes a strong pitch for the stock. The company was cash-flow positive last year, marking the fourth year in a row they've grown sales by at least 20%. And that $110.21 million stashed away in the bank? That's nearly a tenth of their market cap.
Plus, the stock is undervalued, according to Pizzella.
"GENI's trading at a paltry 1-turn discount to its historical average EBITDA multiple," he says. "And we think it's got some relative valuation support when comparing to business-to-business peers—especially considering that 33% three-year adjusted EBITDA CAGR and a robust financial situation."
In short, Genius Sports could be your reliable partner in navigating uncertain waters. Take a look, and see for yourself.
- In a shifting stock market landscape, Genius Sports (GENI) might offer a resilient option for investors facing "golf ball-sized macroeconomic headwinds" within the sports betting sector.
- A fixed revenue stream from gaming companies, coupled with less volatility in volume-based income, makes Genius Sports' revenue predictable, similar to Captain Ahab pursuing Moby Dick.
- Despite potential economic challenges, analyst Steven Pizzella believes Genius Sports has limited downside risk compared to peers in a recession, due to its robust financial situation and resilient revenue streams.
- Genius Sports is forecasted to display strong growth potential, with a high-teens CAGR (Compound Annual Growth Rate) over the next three years and an anticipated 21% increase in 2025 revenue.
- The company's cash-flow positivity in the previous year, backed by a four-year streak of sales growth of at least 20%, separates Genius Sports as a financially sound choice in the sports betting market.
- Genius Sports' undervalued stock presents an attractive opportunity for investors, trading at a 1-turn discount to its historical average EBITDA multiple, with reasonable valuation support when compared to industry peers in the business-to-business sector.
