Wall Street Bets is a roundup of recent notes from analysts covering the gambling industry.
Online sports betting/igaming
In an August 20 note, Jefferies equity analyst David Katz wrote, “The online sports-betting and digital- gaming stocks remain the most discussed names in our coverage. Following the ESPN/Penn announcement, the focus remains on how the landscape should evolve, whether DraftKings and FanDuel can maintain their share, whether BetMGM can regain momentum, further merger and acquisition potential among the (small and mid-cap) names, and whether MGM and Entain could potentially merge. We continue to favor this group within our coverage, because its growth is exempt from the macro uncertainties that impact the rest of the group.”
Analyst David Bain of B Riley Securities, in an August 17 note on gambling.com, wrote, “While second-quarter online sports book industry results were better than expected, Gambling.com’s result well exceeded second-quarter industry growth, illustrating our thesis that Gambling.com should outpace online gaming’s multi-year, visible (total accessible market) growth. Per industry checks, North American online operators are increasingly looking to performance-based marketing solutions, such as Gambling.com, as less ROI-centric customer acquisition and some lower-cost channels are exhausted. In tandem with the North American customer acquisition transition is continued state regulatory liberalization and significant ‘skins’ soon entering the market (ESPN Bet, Fanatics, Caesars Palace Online Casino, etc.). We raise CY23E/CY24E EBITDA 12%/8%. Our target price goes from $14 to $17, based on 12.5x CY24E EV/EBITDA.”
Barry Jonas of Truist Securities also commented on Gambling.com. In an August 17 note, Jonas wrote that the company “posted a strong second-quarter beat with record adjusted EBITDA/revenues as favorable trends continued across the business. Management raised its 2023 guidance given the launch of Kentucky online sports betting, improving fundamentals, and favorable FX. We continue to favor Gambling.com’s positioning in the interactive landscape and see profitable growth continuing. We raise 2023E/2024E adjusted EBITDA +11%/+7% and remain Buy-rated, with our PT to $17 from $14.
Las Vegas Strip room rates
In a weekly survey of Las Vegas Strip room rates for the week of September 10, 2023 to September 16, 2023, J. P. Morgan analyst Joseph Greff wrote, “Midweek rates are +37% and weekend rates are -28% (+6% overall). By company: MGM rates are +19% for the midweek and -35% for the weekend (-7% overall); Caesars rates are +133% for the midweek and -18% for the weekend (+48% overall); Wynn rates are -37% for the midweek and -44% for the weekend (-41% overall); Venetian/Palazzo rates are -12% for the midweek and +102% for the weekend (+13% overall).