Leading broker thinks Pointsbet (ASX:PBH) share price offers 60% upside

Pointsbet shares could be an opportunity.

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One of the leading brokers that evaluates ASX shares thinks that the Pointsbet Holdings Ltd (ASX: PBH) share price could give investors upside of 60% over the next year.

Pointsbet is an ASX-listed corporate bookmaker that has operations in both Australia and the US. It offers sports wagering and iGaming.

Which broker thinks that the Pointsbet share price is an opportunity?

The broker in question is Credit Suisse. It has a price target on Pointsbet on $12.80 – that’s where analysts think that the business will be trading in 12 months from now. In other words, Credit Suisse thinks Pointsbet shares could rise by approximately 60% in a year.

Credit Suisse referenced the recent New York licence with its latest note, with this outcome showing that Pointsbet can be a real player in the US market. But the company will be spending more on marketing to capture that opportunity.

New York win

A couple of weeks ago, Pointsbet said that the New York State Gaming Commission has recommended that Pointsbet’s New York business be awarded a platform provider licence to operate mobile sports wagering in New York.

Pointsbet was only one of nine operators to be recommended by the New York State Gaming Commission, including BetMGM, Caesars and WynnBet.

Official approval procedures will follow, with the recommended operators to undertake independent system testing ahead of the official launch, expected in early 2022.

Pointsbet US CEO Johnny Aitken said:

Having the potential to secure market access to New York state – expected to be one of the largest and most important markets in the United States – represents another major milestone for our company, our brand, and our technology. We are thankful to the Gaming Commission for this recommendation and believe it speaks volumes to PointsBet’s reputation and ability to deliver an unrivalled, world-class experience. We eagerly await the official opportunity to leverage our exclusive sports betting partnership with NBC Sports and introduce the nation’s premier sports betting product to the countless passionate, sports-loving New Yorkers.

Rapid growth

Pointsbet continues to see the business growing quickly.

In the first quarter of FY22, its total turnover increased 42% to $979.9 million, with a 112% increase in the US to $348.6 million.

Pointsbet’s total gross win increased 66% to $117.1 million, with 197% growth in the US to $29.2 million.

The total net win grew by 76% to $67.3 million, whilst the US net win soared by 307% to $12.5 million.

The company also told investors that its cash active clients continue to scale significantly. Year on year, Australian clients jumped 78% to 222,662 and US clients soared 367% to 185,880.

What is the Pointsbet share price valuation?

Credit Suisse isn’t expecting Pointsbet to make a profit in FY22, so there isn’t a profit multiple valuation for this financial year.

The ASX currently puts the Pointsbet market capitalisation at $2.15 billion.

Motley Fool contributor Tristan Harrison 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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