Wall Street Bets: Analysts take on first half of 2023, Gambling.com, DraftKings, MGM Macau

July 18, 2023 11:55 AM
Photo: CDC Gaming Reports
  • Rege Behe, CDC Gaming Reports
July 18, 2023 11:55 AM

Wall Street Bets is a roundup of recent notes from analysts covering the gambling industry.

Truist Securities analyst Barry Jonas, in a July 18 statement, wrote that gaming industry fundamentals through the first half of 2023 “remain largely consistent though the issue is that around now last year is when this consistency started. Domestic land-based revenues are trending slightly down to slightly positive year-over-year (vs. very strong comps). Interactive revenues remain a bright spot for both sports betting (fueled by growing hold) and igaming. This earnings season, we’re listening for operator commentary on player trends in the face of an uncertain macro environment (including student loan repayments, higher interest rates, etc.), while we expect to hear about favorable trends in Gaming Tech and continued stability of the REITs.

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In a July 17 release, B Riley Securities analyst David Bain announced the start of Gambling.com Group Ltd. (GAMB) coverage. An affiliate/performance marketing company focused solely on the online gaming industry, Bain wrote of  issuing “a Buy rating and a $14 price target. Much like Booking.com in the travel industry, Gambling.com participates in the hypergrowth online gambling sector with less risk—and does so profitably. GAMB operates ~50 targeted domestic and international web sites strategically positioned to source depositing customers to online wagering markets. GAMB generates depositors for more than 200 B2C online gaming companies, including all major brands such as DraftKings, BetMGM, and FanDuel.”

Equity analyst David Katz of Jefferies July 17 wrote, in regard to DraftKings, that his firm is making “modest revisions to our estimates for the second quarter of 2023, the full year of 2023, and 2024 following higher than expected state GGR results since our last update on June 8 and incrementally rising expectations going forward. The adjustments are made as we become increasingly comfortable that DraftKings’ product is gaining traction in online sports betting and its markets can support growth. Our second quarter 2023 revenue and adjusted EBITDA estimates are now $742.9 million and $30.3 million vs. $624.1 million and $20 million prior; our full year 2023 estimates are now $3.338 billion and $260.9 million from $3.135 billion and $320.9 million; and full year 2024 estimates are now $3.862 billion and $223.1 million from $3.621 billion and $205.6 million. Note that our estimates are toward the higher end of a widely dispersed.”

Writing about MGM Resorts International’s Macau properties, J. P. Morgan analyst Joseph Greff stated “We are raising our second quarter 2023 Macau property-level EBITDA (post royalty) to $197 million (versus $169 million in the first quarter 20223) to account for better than previously modeled gross gaming revenues as well as higher market share than previously assumed.  Consensus is presently $192 million.  We now project Macau property-level EBITDA of $219 million in the third quarter 2023 and $228 million in the fourth quarter 2023.  In 2024, we see $870 million of post royalty EBITDA – 19% above 2019 levels.  Based on recent monthly U.S. regional gaming revenue reports, our second quarter 2023 regional EBITDAR forecast is now $303 million, $2 million above consensus and $2 million higher than our prior estimate.”