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On Monday, JMP Securities reiterated their Market Outperform rating and $11.00 price target for Genius Sports Ltd. (NYSE: GENI), following a recent equity raise by the company on January 15, 2025. The firm's analyst noted that Genius Sports opted for the fundraising at a time when its shares were trading close to the 30-day moving average and 14% below the 52-week high, with quarterly results surpassing buyside expectations. According to InvestingPro data, the stock has shown impressive momentum with a 31.64% return over the past year and currently trades at $8.82, suggesting potential upside to JMP's target.
The analyst also mentioned that the start of January has been favorable for Genius Sports due to positive game outcomes in the NFL, which bodes well for the first quarter of 2025 results. Despite mixed reactions from investors concerning the equity raise, which was not tied to any immediate mergers and acquisitions (M&A) activity and thus slightly diluted shareholder value, JMP Securities expressed increased confidence in the company's strategic decision to strengthen its balance sheet and its overall business direction.
While no immediate M&A activity is expected, Genius Sports management is prepared to act swiftly should an attractive acquisition target emerge. The analyst highlighted that Genius Sports is likely to accumulate cash throughout 2025, projecting an ending cash balance of approximately $135 million for 2024 and expecting cash reserves to reach around $320 million by the end of 2025. This financial positioning could enable the company to pursue potentially larger deals earlier in the year, rather than waiting until later when more cash is generated, particularly given the seasonality of the business with the NFL season impacting free cash flow (FCF).
JMP Securities anticipates lower FCF in the first half of 2025, estimated at $2 million, with a significant increase to $51 million in the second half of the year. The range of M&A outcomes for Genius Sports includes various sectors such as personalized marketing content technology, AI tracking/analytics, and free-to-play games. The company's proactive approach to M&A opportunities, despite the absence of imminent deals, suggests a strategic effort to position itself advantageously in the competitive sports data and technology market.
In other recent news, Genius Sports Limited has reported strong financial growth, reaffirming its 2024 financial outlook. The company anticipates Group Revenue to hit around $511 million and Group Adjusted EBITDA to reach approximately $86 million. Genius Sports also revealed its preliminary unaudited cash positions, estimating a total of around $135 million as of December 31, 2024.
In addition to its financial performance, Genius Sports has also announced a public offering of 17,647,059 ordinary shares at $8.50 each, expecting to raise about $144 million for general corporate purposes. This development follows an 18% increase in group revenue, totaling $120 million, and a 45% surge in adjusted EBITDA, reaching $26 million in Q3 2024.
Analysts from Benchmark, Needham, and Goldman Sachs have shown confidence in the company's growth trajectory, raising their stock price targets. The company has also launched innovative platforms like BetVision and FANHub, and has formed significant partnerships with ESPN, WNBA, and the LA Rams. Looking ahead, Genius Sports anticipates a 38% revenue growth in Q4 2024 and projects a positive cash flow for the full year of 2024. These are the latest developments in the company's recent performance.
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