Catapult Group International Ltd (ASX: CAT) shares were on fire on Thursday.
The ASX tech stock ended the session over 9% higher at $2.87.
This is the highest close for the sports technology solutions company's shares in a number of years.
Why did this ASX tech stock jump?
Investors were buying Catapult's shares after it delivered a very strong half year result.
Catapult reported a 20% constant currency increase in annualised contract value (ACV) to a record of US$96.8 million (A$143 million) and free cash flow of US$4.8 million (A$7 million). The latter is more than it generated in the whole of FY 2024.
Can this ASX tech stock continue to rise? Let's see what analysts at Bell Potter are saying about the fast-growing company.
What is the broker saying?
Bell Potter was impressed with Catapult's performance during the half, noting that it delivered "beats across the board." The broker said:
1HFY25 revenue grew 16% to US$57.8m and was 2% above our forecast of US$56.9m. The beat was driven by higher Tactics & Coaching (T&C) revenue than we forecast (US$19.5m vs BPe US$19.0m) and importantly this division grew by mid teens rather than the low teens we were forecasting.
Management EBITDA grew >100% to US$6.2m and was 14% above our forecast of US$5.5m. The beat was driven by the beat at revenue and lower opex than we were forecasting. ACV grew by a strong 22% to US$96.8m (4% above our forecast of US$92.7m) and free cash flow also positively surprised at US$4.8m versus our forecast of US$1.8m. The Balance Sheet also improved with net cash improving from US$1m at 31 March to US$5m at 30 September.
Big returns to come
Despite rallying strongly on Thursday, Bell Potter believes that the ASX tech stock can still deliver big returns for investors over the next 12 months.
According to the note, the broker has reaffirmed its buy rating with an improved price target of $3.30 (from $2.88).
Based on its current share price, this implies potential upside of 15% for investors over the next 12 months. It concludes:
We have increased the multiple we apply in the EV/Revenue valuation from 4.25x to 4.75x due to the good growth in now both Performance & Health (P&H) and T&C as well as the better-than-expected ACV growth. We have also lowered the WACC we apply in the DCF from 8.6% to 8.2% due to a reduction in the market risk premium.
The net result is a 15% increase in our PT to $3.30 which is a 15% premium to the share price and we maintain our BUY recommendation. We also note that Catapult is some chance of being added to the S&P/ASX 300 in the next rebalance in December though it seems a more likely chance to occur in March next year.
