Growth Focus: Catapult Group International Ltd (CAT)

by Patrick Taylor

Date of Data Capture: 13/9/2019


Classification: Recreational Products

Current Price: $1.325

Market Capitalisation: $250 M

Forecast EBITDA Growth: 132.60%

Yield Estimate: 0%

Consensus Price Target: $1.70

# Covering Analysts: 4

Discount at Current Price: 28.30%

Price Target Trend (3-Month): Up-Flat +41.67%

Signal Timeframe: Quarterly-Weekly-Daily

Trend Bias: Up-Down / Long-Medium

Short-term: Positive
Medium-term: Positive-Neutral
Long-term: Positive-Neutral

Recommendation: Buy

Focus: Capital Growth

Set up Notes:
• Wearable analytical tech company CAT has experienced extreme price moves, both up and down, and while we think volatility will continue, earnings are increasing again, forecasting is strong and we see fresh signs of price strength.
• Softer performance in 2017 and 2018 saw pricing crash, but sales, earnings and margins all saw positive gains this year, and strongly positive forecasting and sentiment shows expectations for this to continue gaining through to 2022.
• Pricing broke through major linear resistance in May, ending a 30-month decline, but failed to pierce the $1.50 resistance ceiling overhead, but with good momentum and signalling here we think price is set up and ready to run on again.
Support ($): 1.30, 1.20, 1.10 & 1.00.
Resistance ($): 1.40, 1.50, 1.60, 1.60 & 1.80.


Our primary focus here is capital gain, we will select our stocks from the ASX Top 500 All Ordinaries Index.

Quite often the best bargains on the stockmarket will have charts that look a little ugly, showing the huge declines in value that made them bargains to begin with, but being easy on the eye is rarely easy on the wallet. With that in mind we would like to take a closer look at Catapult Group International Ltd as the sports analytics company begins to show fresh strength, with a share price that has been under siege for years.
Catapult develops, produces and distributes wearable tracking and analytical technology solutions for diverse sporting and athletic clients across the Americas, EMEA, Asia-Pacific and Australia. Utilising local and global satellite positioning systems the company is able to offer highly detailed and accurate macro and micro player movement data to measure performance and tactical efficiencies. This is an emerging and unique growth market with Catapult showing strong sales growth, firming its position as a global leader in this space, with clients covering 39 different sports in 137 countries.
Performance has been mixed, but that is not unusual for a company within an aggressive and early growth phase, and recent reporting showed the company’s first move into positive earnings on strong sales and customer growth, with forecasting showing good expectations for this expansion trend to continue out to 2021. Catapult remains focussed on increasing market share and subscriber growth, as well as continuing to develop its product and service offerings, with particular growth markets identified in the US and Europe. Analysts retain a majority positive sentiment with no outright negative views, and show a strong current discount to consensus targets.
Having listed on the ASX early in 2015, Catapult initially sported a strong rally from $1 to over $4 in under two years, before pulling back by more than 85% over the next 30 months. Since the start of 2019 we have watched the share price rally off the lows and work against (and through) overhead resistance, climbing but ultimately failing to break through mid-year, before pulling back to set-up the current situation we see before us.
Here we think a fresh rally is likely, with momentum building across multiple timeframes, and we think a retest of that resistance is highly probable. If that ceiling should break, there are many historical price targets stretching far higher than the current valuation. We expect volatility to remain as the stock works through overhead resistance up to $1.50 and should that break we think they could swing higher again and could represent a far-flung opportunity.


This report was produced by Taylor Securities Pty Ltd, which is a Corporate Authorised Representative (Number 414063) of Bespoke Portfolio Pty Ltd (AFSL 341991). Taylor Securities and Patrick Taylor (Representative number 414064) have made every effort to ensure that the information and material contained in this report is accurate and correct and has been obtained from reliable sources. However, no representation is made about the accuracy or completeness of the information and material and it should not be relied upon as a substitute for the exercise of independent judgment. Except to the extent required by law, Taylor Securities and Patrick Taylor does not accept any liability, including negligence, for any loss or damage arising from the use of, or reliance on, the material contained in this report. This report is for information purposes only and is not intended as an offer or solicitation with respect to the sale or purchase of any securities or financial products. The securities or financial products recommended by Taylor Securities and Patrick Taylor carry no guarantee with respect to return of capital or the market value of those securities or financial products. There are general risks associated with any investment in securities or financial products. Investors should be aware that these risks might result in loss of income and capital invested. Neither Taylor Securities and Patrick Taylor nor any of its associates guarantees the repayment of capital. WARNING: This report is intended to provide general financial product advice only. It has been prepared without having regarded to or taking into account any particular investor’s objectives, financial situation and/or needs. Accordingly, no recipients should rely on any recommendation (whether express or implied) contained in this document without obtaining specific advice from their advisers. All investors should therefore consider the appropriateness of the advice, in light of their own objectives, financial situation and/or needs, before acting on the advice. Where applicable, investors should obtain a copy of and consider the product disclosure statement for that product (if any) before making any decision.

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