Posted on: January 4, 2022, 10:56h.
Last up to date on: January 4, 2022, 11:21h.
Craig-Hallum analyst Ryan Sigdahl is out with a broad commentary on gaming shares immediately, trimming worth targets on six names.
Slot machines at a Penn National on line casino. Craig-Hallum analyst Ryan Sigdahl lowered worth targets on six gaming shares, together with Penn. (Image: TheStreet)
While the analyst isn’t overtly bearish on the shares, he’s paring worth outlooks on six corporations – all of which have ties to web casinos and on-line sportsbooks. That group consists of DraftKings (NASDAQ:DKNG) and Penn National Gaming (NASDAQ:PENN), two of final yr’s most severely punished gaming shares.
While sustaining a “purchase” ranking on DraftKings, Sigdahl slashes his worth goal on that inventory to $51 from $70, becoming a member of a rising record of analysts reducing worth forecasts on the net sportsbook operator. On the upside, the analyst says on-line sports activities wagering is a megatrend that’s nonetheless in its early innings, and the shortage of the way with which to play that development are favorable factors for DraftKings.
He believes the operator can bolster iGaming market share and earnings earlier than curiosity, taxes, depreciation and amortization (EBITDA) forward of its beforehand introduced forecast.
Penn Not Fully Appreciated
Of the six corporations which can be receiving lower cost estimates from Sigdahl, Penn National is the one one which runs land-based casinos.
In reality, the corporate is the most important regional on line casino operator within the US. The Craig-Hallum analyst trims his worth forecast on Penn to $96 from $130, whereas acknowledging brick and mortar casinos present robust money circulate Penn can use to fund web investments, together with Barstsool Sportsbook.
While Penn has been synonymous with David Portnoy’s Barstool Sports for 2 years after taking a 36 % stake in that media property in January 2020, Sigdahl says the wedding of Barstool’s devoted fan base, favorable demographics, advertising prowess and Penn’s multi-state footprint “creates an unmatched omnichannel providing.”
Penn inventory was repudiated final yr, and it resides 65.44 % beneath its 52-week excessive. But some analysts are highlighting it as a 2022 rebound candidate.
Slew of Gaming Tech Stocks Get Trimmed
Sigdahl additionally takes the ax to his worth targets on sports activities betting information suppliers Genius Sports (NYSE:GENI) and Sportradar. He lowers the previous to $22 from $27, and the latter to $30 from $35.
He notes each corporations proceed sporting spectacular compound annual progress charges and stout EBITDA margins. The analyst provides each corporations evaluate favorably with conventional massive information purveyors, and supply superior margin enlargement potential relative to entrenched corporations within the information area.
Speaking of gaming tech names, Sigdahl pares his worth goal on GAN (NASDAQ:GAN) to $14 and $18. While he likes near-term traits for the gaming software program supplier, he provides GAN may face aggressive threats as its mannequin evolves to incorporate extra publicity to business-to-consumer shoppers.
The different gaming inventory Sigdahl lowers his worth estimate on is Rush Street Interactive (NYSE:RSI). The analyst goes to $19 from $22 on that inventory whereas sustaining a “purchase” ranking on the iGaming and on-line sportsbook operator.