The PointsBet Holdings Ltd (ASX: PBH) share price has come under pressure again on Friday.
In morning trade, the sports betting company's shares are down a further 10% to a 52-week low of $7.76.
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Is the weakness in the PointsBet share price a buying opportunity?
The PointsBet share price has been sold off over the last couple of trading sessions following the release of its first quarter update.
According to a note out of Goldman Sachs, its analysts believe this could be a buying opportunity for investors. This morning the broker retained its buy rating but trimmed its price target to $12.79.
Based on the current PointsBet share price, this implies potential upside of 65% for investors over the next 12 months.
How did Goldman respond to the update?
Goldman notes that PointsBet delivered softer growth but stronger margins than it was anticipating during the quarter.
It commented: "PBH reported its 1Q22 update, which was characterized by: 1) Australia Net Win up 56% to A$54.8mn, well above recent peer commentary for the Sep-21 quarter, 2) strong gross/net margins in Aus of 13.9%/8.7% despite elevated promotional activity, 3) US turnover of +112% to A$348.6 mn came in softer than what was implied by our prior 1H21E, 4) however US Net Win was up 307% to A$12.5mn on 3.6% margins vs GSe 2.2% prior FY22E, and 5) overall sales/marketing spend of A$46.5 mn in the quarter was run-rating well below our prior 1H estimate of ~A$120mn."
In addition, the broker highlights that management remains confident of operating in Arizona, as well as its 10% market share target in both Australia and the US over the long term.
Overall, Goldman has seen enough in this result to remain positive on the PointsBet share price. It feels investors should focus less on the short term and more on its long term opportunity.
It commented: "[We] Reiterate our Buy rating on PBH […] We believe the sell off is driven by the market's focus on its short term quarterly handle market share trends; however we believe the LT thesis remains intact."
