FIFA Certification may help speed sales process
Catapult Group International (CAT) announced that is has become the first provider of wearable athlete tracking devices to have its technology approved for in-game use by the Federation of International Football Associations (FIFA). While FIFA approval does not imply endorsement from the peak body of the global football game, we believe that certification should provide an advantage in signing up new customers among national governing bodies and member clubs.
Soccer represents a major market opportunity for Catapult over the coming decade. Morgans' recent research on global sporting clubs and bodies revealed that more than 60 percent of clubs in the top 100 football leagues globally do not currently use GPS tracking devices.
Risks and catalysts
Risks to Catapult's near-term revenues and share price include:
- failure to secure major league-wide deals;
- new team-based contract signings fall short of expectations;
- further operating cost blow-outs; and
- irrational competitor behaviour or a major league-wide deal by a competitor with negative implications for Catapult.
Potential near-term re-rating catalysts for Catapult include:
- winning one or more significant league-wide subscription deals;
- better-than-expected team-based subscription sales;
- better-than-expected cost controls; and
- loss of a major client to a close rival.
There are no changes to our forecasts or valuation, as our forecasts already assume strong growth in subscribers for elite wearable devices. As Catapult's share price is substantially below our valuation and share price target, we retain our Add recommendation.
Note that Catapult has not yet become self-sustaining from a cash flow point of view. As such, the stock is high risk.
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Disclaimer: The information contained in this report is provided to you by Morgans Financial Limited as general advice only, and is made without consideration of an individual's relevant personal circumstances. Morgans Financial Limited ABN 49 010 669 726, its related bodies corporate, directors and officers, employees, authorised representatives and agents (“Morgans”) do not accept any liability for any loss or damage arising from or in connection with any action taken or not taken on the basis of information contained in this report, or for any errors or omissions contained within. It is recommended that any persons who wish to act upon this report consult with their Morgans investment adviser before doing so.