In new, wholesale reportage of gaming equities JMP Securities psychoanalyst Hashemite Kingdom of Jordan Bender highlights downtrodden DraftKings (NASDAQ:DKNG) and William Penn National Gaming (NASDAQ:PENN) as deuce of the stocks offering investors substantial upside potential.
Bender’s calls on DraftKings and Penn get with gaming stocks out of favor and with both names struggling mightily. Shares of the daily fantasy sports (DFS) behemoth and online sportsbook manipulator are off 50.49% year-to-date patch William Penn is let down past nearly 38%.
Specific to DraftKings, the investment community is tiring of luxuriously customer acquisition costs and a lengthening road to profitability, but Bender is optimistic improve days are onwards for the stock.
Management has proven its power to bring in market place access code inward sound states, with industry-leading U.S. universe exposure,” writes the analyst. “As a result, we view DKNG growing revenue at a 19% CAGR through 2030. While we are inwards ahead of time innings of the online gaming sector, we believe DKNG put up defend cover deal inwards NA online gaming, goaded through and through cross-sell and its superordinate engineering capabilities inward SBTech, leading to profitable growth.”
Bender rates DraftKings “outperform” and places a $25 damage target on DraftKings, implying upside of virtually 80% from the June 27 close. That direct is a premix of a 4x 2025 to 2027 sales estimates and 12x the 2027 earnings before interest, taxes, wear and tear and amortisation (EBITDA) forecast.
Inflation Not Yet Gripping Penn
As the largest regional gambling casino operator, Penn National is seen as vulnerable to macroeconomic headwinds, of which at that place are plentitude to move around in the electric current environment.
A sagging gunstock market, rising interest group rates and inflation that shows no more sign on of cooling over the near-term are among the factors analysts and economists control weighing on consumer trust and spending. That’s potentially ominous for cassino operators, which are the epitomes of consumer cyclical names. However, Bender believes recent marketing force per unit area in Penn is pricing in a depression-like scenario that’s unlikely to materialize.
“As shares are trading around $30, we believe the market place is now reflecting a scenario where EBITDAR testament decline 20-25% from 2023 consensus estimates for Penn’s regional casinos. This would imply higher disconfirming flow-through vs. the Great Financial Crisis,” notes the JMP analyst.
Bender adds that nix in his television channel checks currently suggests that William Penn is being hampered by the aforementioned macroeconomic challenges.
He rates William Penn “outperform” with a $52 damage target, of which $44 is derived from the operator’s land-based concern and $8 comes from its online unit, including theScore and Barstool Sportsbook.
Other New Coverage
Bender also initiated coverage of FanDuel parent Flutter Entertainment (OTC:PDYPY), Golden Entertainment (NASDAQ:GDEN), MGM Resorts International (NYSE:MGM) and Benjamin Rush Street Interactive (NYSE:RSI) with “outperform” ratings.
The analyst has a $55 damage forecast on MGM, noting the BetMGM alone could live worth $18 a share.
He also started reportage of Bally’s (NYSE:BALY) with a more tepid “market perform” an no more terms projection.