The Catapult Group International Ltd (ASX: CAT) share price has had a bright start to the week.
At one stage the sports analytics company's shares were up as much as 11% to $1.67. In afternoon trade they have given back some early gains, but still sit 8% higher at $1.62.
What happened?
With no news out of the company or broker notes to speak of, today's gain could be related to the Aconex Ltd (ASX: ACX) takeover offer that was announced this morning.
The $1.6 billion offer by Oracle valued Aconex at over 8x the high-end of its FY 2018 sales guidance.
Catapult, on the other hand, trades on a much lower multiple. This year management expects revenue of between $76 million and $81 million.
At the high-end of this guidance range Catapult's shares are changing hands at just a touch over 3x estimated FY 2018 sales even after today's gain.
Given the similarities in their business models and growth potential, some investors appear to believe that Catapult is deserving of a rerate higher.
Fellow tech company Appen Ltd (ASX: APX) has also seen its share price climb strongly today.
Should you buy Catapult's shares?
While I am a big fan of the company and its technology, I would like to see how its business performs during the first-half of FY 2018 before making an investment.
Its top line growth has been impressive, but its free cash flow generation has not been as strong as I expected. I'm optimistic that FY 2018 will be a big step forward, but until I've seen evidence of it I'm going to sit on the sidelines and watch on with a keen interest.
