Sportradar ‘a critical player,’ Truist analysts says
Truist Securities initiated coverage of Sportradar Group on 1 July with a “buy” rating and a US$33 per share price target. Shares of SRAD stock were trading at US$28.08 at the time of Barry Jonas’ investor report.
Jonas explained the decision by saying that Sportradar was “largest [business-to-business] partner for the sports betting industry” and it “has become increasingly important to its customers (operators, leagues and media).”
A worldwide sports data-and content-solutions platform, Sportradar aggregates more than 1 million sporting events around the globe. It covered 85 sports in 2024, constituting 7.6 billion streams, 87 billion bets and more than 65 million customers. According to Truist, Sportradar “works with 800 betting operators, 900 media companies and 400 leagues/teams/federations.”
Jonas opined that there was value in Sportradar in large part because of its propensity for long-term contracts. These “drive high visibility to revenues, while there’s runway to upsell higher-margin products, as the market has consolidated to a duopoly” of DraftKings and FanDuel.
At its investor day, Sportradar predicted three-year cash-flow growth of 27%, but Jonas thought the company could do even better. Were the global sports betting market to grow more than 10% per year, Sportradar would exceed 27%. An increase in proposition betting also would cause Sportradar to overshoot its target number.
“The company has stated its 2027 targets have upside if the OSB market grows more than expected, or if new states open,” the report elaborated. “Company revenues improve as new states launch, as do margins, given SRAD’s contract costs become spread across more jurisdictions.”
However, Jonas’ legislative sources had led him to believe there would be few, if any, additional state launches next year — although “a slew” were foreseeable in 2027.
Jonas also felt the market was not factoring in Sportradar’s purchase of IMG, which could be immediately accretive. That deal is anticipated to close sometime between October and year’s end.
“We see SRAD as a critical player in the OSB ecosystem, with its capabilities creating a moat around the business,” the analyst continued. “While OSB operators have revenue volatility risks around bad luck/higher taxes, SRAD has less as it mostly receives fixed, guaranteed revenues with some variable kickers offering upside.”
Of Sportradar’s revenue, 68% has been of a recurring sort in 2024 and 77% of that came from overseas, according to Truist. The business generated by high-margin proposition bets was expected to increase, thereby enlarging a maturing United States market.
Given negligible debt of US$51 million, “SRAD is well positioned for capital returns and/or accretive M&A,” Jonas opined.
The analyst cautioned that “the inability to renew key contracts favorably would pressure both SRAD’s top and bottom-lines, though we see this as unlikely.” He added that tax increases and Commodity & Futures Trading Commission inaction against prediction markets could pressure Sportradar’s stock, but not its underlying fundamentals.
“As a Swiss-based foreign issuer, SRAD is not eligible for index inclusion,” Jonas concluded. He pointed out that, even though it was US-listed, Sportradar functions and trades in euros, which constitute 71% of its revenue, “and it’s exposed to sizable currency volatility.”
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David McKee is an award-winning journalist who has three decades of experience covering the gaming industry.
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