The Catapult Group International Ltd (ASX:CAT) share price is under pressure on Friday after Bell Potter downgraded its shares…
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The Catapult Group International Ltd (ASX: CAT) share price has come under pressure on Friday.
In late afternoon trade, the sports analytics and wearables company’s shares are down almost 5% to $2.15.
Why is the Catapult share price under pressure?
There are a couple of catalysts for the weakness in the Catapult share price on Friday.
The first is profit taking after some strong gains recently. Prior to today, the Catapult share price was up over 17% since the end of last week.
This was driven largely by investors snapping up shares after the release of its FY 2021 results on Thursday.
Although the company reported a decline in revenue, it continues to report growth in the right areas.
For the 12 months ended 31 March, Catapult posted a 7.4% decline in revenue to $67.3 million for the 12 months. This was driven by its planned shift from capital sales to SaaS deals and the severe impact from COVID delaying new business.
In respect to the former, the company’s subscription revenue growth accelerated to 12.5% in the fourth quarter. This compares to 3.3% for FY 2021 and means that its subscription revenue is now 79% of total revenue. This is up from 71% a year earlier.
What else is weighing on its shares?
As well as profit taking, a broker note could be weighing on the Catapult share price today.
According to a note out of Bell Potter, its analysts have downgraded the company’s shares to a hold rating but lifted their price target to $2.40.
While Catapult’s FY 2021 result was stronger than Bell Potter was expecting and it was pleased with the progress it is making with subscription revenues, it isn’t enough to continue with its buy rating.
The broker felt that Catapult’s shares were fully valued after yesterday’s gains and downgraded them to a hold rating.
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