The PointsBet Holdings Ltd (ASX: PBH) share price has come under significant pressure this year.
Since the start of 2022, the sports betting company's shares have lost 48% of their value.
Image source: Getty Images
What's going on?
Investors have been selling down the PointsBet share price this year amid concerns over rising competition, marketing costs, and cash burn across the sports betting industry.
However, the team at Goldman Sachs appear to believe this could be a buying opportunity for investors.
Goldman has just held its 2022 Digital Evolution of Global Gaming Virtual Conference. This saw the broker host a panel spanning listed sports betting companies, private players, and industry experts.
Goldman notes: "Near-term, panelists acknowledged the major negative shift in investor sentiment over the past year, but most were equally bullish on the growth ahead and pointed to rationalizing promotions."
The broker also highlights three key takeaways from the conference which could be positives for the PointsBet share price. It explained:
"1) positive momentum in legalization in the US and internationally with potential for California to launch in 2023 and most states proposing lower tax/licensing requirements than the current average; 2) confidence from multiple operators surrounding the upcoming Ontario launch, which spans both OSB and iGaming for a population equivalent to roughly the fifth largest US state; and 3) improving visitation at brick and mortar locations through March as highlighted by PENN, offering read-across to other casino names and broader leisure trends even in the face of geopolitical conflict and inflation."
Is the weakness in the PointsBet share price a buying opportunity?
According to the note, the broker believes the PointsBet share price offers material upside potential for investors. Its analysts have a buy rating and $6.74 price target on the company's shares.
Based on the current PointsBet share price, this suggests the company's shares could rise 80% over the next 12 months.
Goldman said: "We reiterate our Buy ratings on ENT, PENN, PBH, and GENI where we see compelling valuation after the recent pullback with significant exposure to rapid growth and a rationalizing promotional environment."
