SRAD is the largest data distributor in the high-growth global sports betting market, which drives our 25% ’20-’23e rev and ~30% EBITDA growth forecast. We believe SRAD’s quality warrants a premium growth-adjusted multiple vs. pure-play comp GENI. As a result, we initiate on SRAD at OW and $27 PT.
We initiate coverage of SRAD with an Overweight rating and $27 price target, implying 15% upside. We see four key positives. SRAD 1) has significant exposure to the high-growth global sports betting market, which we see growing 12% per year from ’20-23e; 2) is the scaled leader (~40% market share) in the concentrated B2B sports data distribution sector (the only true comps are StatsPerform, Genius Sports, IMG Arena, BetConstruct); 3) has diversified, recurring revenue streams (78% subscription-based) that provide predictability to cash flow generation; and 4) has a proven scalable high-margin (~50% 2020) business internationally that should translate to higher consolidated margins over time as its more nascent (including US) businesses mature.