Catapult Sports Ltd (ASX: CAT) shares have been in fine form this week.
So much so, the ASX tech stock is up 23% since Tuesday's close, including an 18% gain on Wednesday.
Is it too late to invest? Let's see what Bell Potter is saying about the sports technology company.
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What is the broker saying about this ASX tech stock?
Bell Potter was pleased with Catapult's performance in FY 2026. It highlights that the company's results were ahead of expectations for everything except its annualised contract value (ACV). It said:
FY26 management EBITDA – the key earnings metric – of US$24.7m was 8% above our forecast of US$23.0m and 10% above consensus of US$22.4m. Notably, the guidance was 50% growth and it came in at 67%. The beat was driven by a 2% beat at revenue (US$140.7m vs BPe US$137.9m) and a 90bp beat at the margin (17.6% vs BPe 16.7%).
ACV of US$133.8m was close to in line with our forecast of US$133.6m and consistent with the guidance of b/w US$133-134m. Free cash flow before transaction costs of US$6.6m was also ahead of our forecast of US$5.6m and the guidance of US$5-6m. Catapult almost achieved the Rule of 40 with a result of 36% which excludes the impact of the IMPECT and Perch acquisitions (46% including).
The broker also highlights that the ASX tech stock's guidance for the year ahead was slightly ahead of expectations. This has seen Bell Potter lift its estimates slightly. It adds:
Catapult provided its usual guidance for the year ahead of strong ACV growth, continued improvement in margins, and higher free cash flow. We have upgraded our FY27 and FY28 management EBITDA forecasts by 6% and 3% which has mostly been driven by increases in our margin estimates. We have also upgraded our FY27 and FY28 ACV forecasts by 2% and 1% and this equates to ACV growth of 17% and 16% which is below the traditional 18-22% target but is obviously getting more difficult as the number gets larger. We now forecast free cash flow of US$10m in FY27 and US$14m in FY28 which is consistent with the guidance.
More upside to come
According to the note, the broker has retained its buy rating on the ASX tech stock with an improved price target of $4.65 (from $4.50).
Based on its current share price of $3.58, this implies potential upside of 30% for investors over the next 12 months.
Commenting on its buy recommendation, the broker said:
There is perhaps a lack of short term catalysts for the company but the stock does look reasonable value on an FY27 EV/EBITDA multiple of c.20x (based on management EBITDA) and we do expect another year of strong growth. The company also has a strong Balance Sheet with cash forecast to rise to c.US$60m at year end and so while we do not expect any acquisitions in the near term we do see potential for further M&A in the short to medium term.
