Top broker tips 80% upside for the PointsBet (ASX:PBH) share price

This sports betting company's shares could be in the buy zone…

| More on:
A group of men in the office celebrate after winning big.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Key points

  • PointsBet shares have fallen heavily over the last 12 months
  • Goldman Sachs believes this has created a buying opportunity
  • The broker's price target implies potential upside of over 80%

The PointsBet Holdings Ltd (ASX: PBH) share price could be a bargain buy after recent weakness.

That's the view of one of Australia's leading brokers, which has reiterated its buy rating on Monday morning.

Why is the PointsBet share price a bargain buy?

According to a note out of Goldman Sachs, its analysts have reiterated their buy rating with a trimmed price target of $11.00.

Based on the current PointsBet share price of $6.05, this implies potential upside of 82% over the next 12 months.

Goldman believes that the company's shares could rerate to higher multiples this year, particularly given the transformational year that it has ahead of it.

What did the broker say?

Goldman feels the weakness in the PointsBet share price has created a buying opportunity for investors.

It commented: "Online sports-betting stocks significantly sold off in CY21, particularly US listed peers, which we believe can be attributed to: i) concerns around competition and sustainability of the sector, ii) generally slower-than-expected new state openings, and iii) market inflation concerns and rotation from these high-growth names. That said, we see this as an attractive entry point for PBH given the lowered expectations and transformational year ahead wherein it is targeting a tripling of North American state exposures."

"In our view CY22 will be a transformational year for PBH, given a confluence of some US states maturing, rationality playing out between competitors, potentially consolidation across the industry as well as PBH's target of almost tripling its North American state exposure from the 8 currently operational in Q2FY22E. Some of the next states set to be announced will include New York where PBH already had success in previous tenders, Ontario Canada, Pennsylvania, Maryland, Tennessee and Louisiana," the broker added.

Looking ahead, Goldman is expecting PointsBet's second quarter update later this month to "continue to highlight strong momentum across its domestic franchise." The broker expects the company to be "firmly 4th place in terms of market share across digital wagering domestically noting its target of 10% share by 2025 (~4% now)."

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns and has recommended Pointsbet Holdings Ltd. The Motley Fool Australia has recommended Pointsbet Holdings Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Broker Notes

A man in a dark blue suit walks through an airport past floor-to-ceiling windows with a Qantas plane flying in the distance
Travel Shares

Up 16% this year, does Macquarie rate Corporate Travel Management shares a buy, hold or sell?

Does the travel stock have further to fly?

Read more »

group of friends checking facebook on their smartphones
Broker Notes

Macquarie tips 22% return for this ASX telco stock

This telco could be undervalued at current levels according to the broker.

Read more »

A male sharemarket analyst sits at his desk looking intently at his laptop with two other monitors next to him showing stock price movements
Broker Notes

Leading brokers name 3 ASX shares to buy today

Here's why brokers believe that now could be the time to snap up these shares.

Read more »

A mature age woman with a groovy short haircut and glasses, sits at her computer, pen in hand thinking about information she is seeing on the screen.
Broker Notes

Passive income: What's CBA's dividend outlook according to Macquarie?

Is CBA still a top passive income stock?

Read more »

A smiling woman looks at her phone as she walks with her suitcase inside an airport.
Broker Notes

Down 41% in a year, why Macquarie thinks Flight Centre shares are set to rebound

Is Flight Centre about to take off?

Read more »

A group of miners in hard hats sitting in a mine chatting on a break as ASX coal shares perform well today
Broker Notes

Does Macquarie rate Liontown Resources shares a buy, hold or sell?

Let’s find out what the broker had to say.

Read more »

Machinery at a mine site.
Broker Notes

Up 48% this year, does Macquarie think Lynas Rare Earths has further to run?

Changing market dynamics.

Read more »

A couple cheers as they sit on their lounge looking at their laptop and reading about the rising Redbubble share price
Broker Notes

Top brokers name 3 ASX shares to buy next week

Brokers gave buy ratings to these ASX shares last week. Why are they bullish?

Read more »