Leading broker tips PointsBet (ASX:PBH) share price to shoot higher

The PointsBet Holdings Ltd (ASX:PBH) share price was on form last week but could still go a lot higher from here according to a leading broker

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The PointsBet Holdings Ltd (ASX: PBH) share price was on form last week.

The sports betting company’s shares rose 5.5% over the five days.

This latest gain means the PointsBet share price is up 15% year to date and 255% over the last 12 months.

Why did the PointsBet share price charge higher last week?

Investors were buying the company’s shares following the release of a strong third quarter update.

For the three months ended 31 March, the company reported a 236% increase in turnover to $905.2 million.

This was driven by strong growth across both the Australian and United States markets.

In Australia, turnover increased 137% jump to $423.2 million, whereas in the United States, it reported a 431% increase in turnover to $482 million.

Positively, its net win grew even quicker. PointsBet reported a net win of $64.9 million, which was up 246% on the prior corresponding period.

Is it too late to invest?

One broker that doesn’t believe it is too late to invest is Goldman Sachs.

This morning the broker retained its buy rating and trimmed its price target ever so slightly to $17.20.

Based on the latest PointsBet share price, this price target implies potential upside of 26% over the next 12 months.

What did Goldman say?

Goldman spoke very positively about the quarter and expects more of the same in the fourth quarter.

It commented: “We view PBH’s 3Q21 update as a strong set of numbers, further validating our positive thesis on the stock, with momentum clearly robust into 4Q and beyond. Overall we walked away from the update incrementally more positive about both the Aus and US operations.”

“In our view, the update was characterized by i) very strong Gross/Net margin result, such that Group Net Win YTD came in at A$148 mn, run-rating well above our prior FY21E forecast, 2) robust growth in total active clients, which were up 90%/127% in 3Q vs. pcp respectively for AUS/US, 3) PBH talked to cost per acquisition (CPAs) of <US$500 in 3Q across the US states it’s operational in, consistent with our view here, 4) iGaming launch in Michigan is imminent, with NJ launch expected in June, which should further boost margins, and 5) PBH expects to be operational in Pennsylvania in 1HCY22, with potential for simultaneous roll-out of Sportsbetting and iGaming, whilst they remain constructive on Canada prospects, with a potential launch in early CY22.”

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James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of and recommends Pointsbet Holdings Ltd. The Motley Fool Australia has recommended Pointsbet Holdings Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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