Caesars, Flutter Are Wells Fargo’s Top Sports Betting Equity Ideas, Tepid on DraftKings
Following a bumpy stretch for a variety of sports betting stocks, some banks are reassessing ratings and terms targets on those names. At H. G. Wells Fargo, Caesars Entertainment (NASDAQ:CZR) and Flutter Entertainment (OTC:PDYPY) upside the lean of near-term ideas.
In a annotation to clients today, analyst Daniel Politzer said Caesars and Flutter, the parent companion of FanDuel, offer up investors the to the highest degree compelling risk/reward profiles inward the sports wagering industry at the moment.
CZR and FLTR tender the topper risk/reward here, as we trust these companies’ direction teams have got both the believability and cart track records to spurt a route to profitability (both feature said they await immediate payment rate of flow to turn of events prescribed during 2023),” he said inwards a short letter to clients.
Politzer reiterates “overweight” ratings on both names. He started reporting of 11 gaming stocks inward mid-September, with Caesars and Flutter also ranking as ii of his preferred picks at that time.
Caesars, Flutter Attractive After Pullbacks
Caesars and Flutter are connection other gaming equities to the downside in recent weeks. But there’s no shortage of bullish opinions on the names, stating the retrenchments experienced by the stocks could follow creating attractive entry points.
Still, Politzer trims his Caesars terms aim to $127 from $145. But the new forecast implies upside of 47.6 percent from the Dec. 16 close. The Wells Fargo psychoanalyst adds the tieback inwards iGaming and online sports betting equities is creating interesting opportunities, of which Caesars is one.
As for Flutter, FanDuel is the largest online sportsbook manipulator in the US, and recent state-level data suggests the manipulator is maintaining or expanding market place divvy up inwards marquee states, such as Michigan and New Jersey. Nov numbers come out of New Jersey also indicate the FanDuel online casino is experiencing raging top-line growth. The obvious 2022 accelerator for Flutter shares is a spin-off of FanDuel. But there’s to a greater extent to the story.
Flutter, which also owns Paddy Power and PokerStars, controls some of the most recognisable brands inward matured betting markets, such as Australia and Europe. That’s piece many of its US competitors feature no more international exposure.
Downbeat, Sort of, on DraftKings
Down 31 percent o'er the past tense month, DraftKings (NASDAQ:DKNG) is ace of the to the highest degree beleaguered sports betting stocks, and Well’s Fargo’s Politzer offers a tepid assessment of the name.
The analyst maintains an “overweight” rating on DraftKings, projecting it as a top-four iGaming/online sportsbook operator o'er the long term. But he notes marketplace share trends and the oft-cited path to profitability are lumpy.
His $41 toll direct on the stock, which is advantageously higher up the $28.50 region at which it currently trades, is based on a 2025 initiative value/sales multiple of 5x. That’s compared to DraftKings’ mountain chain of 5x to 8x over the yesteryear 18 months.
Politzer adds the stock’s 44 percent fourth-quarter slide is relief valuation concerns. But that’s not yet inviting buyers, as highlighted by a 14.21 percent decline over the past tense week.