Why the PointsBet (ASX:PBH) share price has jumped 10% in a week

PointsBet’s shares are jumping, here’s why…

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The PointsBet Holdings Ltd (ASX: PBH) share price has been a positive performer in recent trading sessions.

So much so, since this time last week, the sports betting company’s shares have risen 10%.

Why is the PointsBet share price rising?

There appears to have been a couple of catalysts for the recent rise in the PointsBet share price.

One was M&A activity in the industry and the other was a bullish broker note out of Goldman Sachs.

In respect to the former, last week DraftKings made a US$20 billion offer to acquire UK based online betting company Entain. It is the company behind a range of brands including BetMGM, bwin, and Ladbrokes.

The multiples involved in the transaction appear to help justify the premium the PointsBet share price trades at.

What about the broker note?

Also giving the PointsBet share price a lift was a broker note out of Goldman Sachs.

That note reveals that the broker has a buy rating and $14.75 price target on the company’s shares.

Based on the current PointsBet share price of $10.18, this implies potential upside of 45% over the next 12 months.

Why is Goldman bullish?

Goldman believes PointsBet’s shares aren’t fully reflecting a potentially transformational 12 to 18 months ahead.

The broker explained: “We continue to see it as well-placed domestically noting it saw a record monthly performance in July 2021, the spring racing carnival and AFL/NRL grand finals should drive 1Q, and recent app DL data suggesting its share domestically continues to outpace its market share. Beyond this, the US remains the key attraction in our investment case, and we are of the view that there are asymmetric risks ahead, with the current share price not fully reflecting what we expect to be a transformational 12-18months ahead for the company as they aim to triple their operational footprint by CY22.”

Overall, this could make it worth considering the growing sports betting company even after its strong recent gains.

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Motley Fool contributor 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 has recommended 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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