1. Genius Sports Limited (NYSE:GENI)
Market Cap: $1.54 billion
Upside: 129.89%
Number of Hedge Fund Holders: 40
Genius Sports Limited (NYSE:GENI) is one of the Overlooked Small Cap Stocks to Buy Now. On February 9, Citizens JMP maintained a Market Outperform rating on the stock but lowered the price target from $17 to $11. On the same day, Trey Bowers from Wells Fargo also reiterated a Buy rating on Genius Sports Limited (NYSE:GENI) and lowered the price target from $16 to $10.
The ratings follow management’s announcement to acquire Legend on February 5. Legend is a digital sports and gaming media network built to monetize attention and the deal is valued at roughly $1.2 billion, with $900 million payable at closing and an earnout of up to $300 million. Notably, management highlighted that the acquisition is expected to be accretive for the company’s EBITDA margins and free cash flow immediately, while sustaining at least 20% revenue growth annually through 2028.
According to Citizens this move is seen as a bold step for growth but at the risk of lower quality earnings. Analysts at Citizens JMP noted that the management’s leverage targets are gross, not net, and net leverage should drop below 1x by 2028, which the firm sees as a positive factor despite short-term debt concerns. The analysts also highlighted that they spoke with the management of Genius Sports Limited after the deal to understand how the acquisition will be integrated with their business. While Citizens JMP have understood that the combination will be good for the pro forma business, the learning curve for investors would be steep to fully understand the deal.
Genius Sports Limited (NYSE:GENI) is a global sports data and technology company powering the sports, betting, and media ecosystem. It captures and distributes live sports data, streaming, analytics, and integrity services to leagues, sportsbooks, and broadcasters worldwide.
While we acknowledge the potential of GENI to grow, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk. If you are looking for an AI stock that is more promising than GENI and that has 100x upside potential, check out our report about this cheapest AI stock.
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