'Compelling valuation': Broker tips PointsBet (ASX:PBH) share price to rise 80%

PointsBet shares have been tipped to rebound strongly…

| More on:
Two men excited to win online bet

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 been hammered in 2022.
  • Goldman Sachs believes this is a buying opportunity.
  • Its analysts have reiterated their buy rating with a price target 80% ahead of where its shares trade today.

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.

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."

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

Four people on the beach leap high into the air.
Broker Notes

4 ASX All Ords shares offering 10% to 30% annual growth: brokers

These ASX All Ords stocks have caught the eye of brokers this week.

Read more »

A young woman lifts her red glasses with one hand as she takes a closer look at news about interest rates rising and one expert's surprising recommendation as to which ASX shares to buy
Broker Notes

Top brokers name 3 ASX shares to buy today

Here's what brokers are recommending as buys this week.

Read more »

A man holding a cup of coffee puts his thumb up and smiles while at laptop.
Broker Notes

Here are 2 ASX shares that Morgans rates as buys

Let's see why the broker is feeling bullish on these stocks.

Read more »

A smiling businessman in the city looks at his phone and punches the air in celebration of good news.
Broker Notes

Guess which ASX 200 stock was just upgraded to a buy rating

Why did the broker just turn bullish? Let's find out.

Read more »

Two brokers analysing stocks.
Broker Notes

Don't miss these changes to broker ratings on ASX shares

The verdicts are in.

Read more »

Broker written in white with a man drawing a yellow underline.
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 stocks.

Read more »

man thinking about whether to invest in bitcoin
Broker Notes

Why now is the time to buy this beaten down $8b ASX 200 stock

Goldman Sachs thinks that now is the time to invest in this beaten down drinks giant.

Read more »

a man sits alone in his house with a dejected look on his face as he looks at a glass of red wine he is holding in his hand with an open bottle on the table in front of him.
Broker Notes

Red alert! 4 ASX All Ords shares just got broker downgrades

These ASX All Ords stocks have caught the attention of brokers for all the wrong reasons.

Read more »