Key points
- The PointsBet share price is jumping on Tuesday
- One leading broker sees scope for its shares to rise a further 90%
- Broker sees massive opportunity in the US
The PointsBet Holdings Ltd (ASX: PBH) share price has been a very strong performer on Tuesday.
In afternoon trade, the sports betting company's shares are up 8% to $5.24.
Why is the PointsBet share price storming higher?
Investors have been bidding the PointsBet share price higher on Tuesday for a couple of reasons.
The first is a rebound in the tech sector and particularly the sports betting industry. For example, larger rival Draftkings saw its shares jump 7% overnight on the Nasdaq index.
In addition, a bullish broker note out of Goldman Sachs appears to have given its shares a boost. According to the note, the broker has reiterated its buy rating with a trimmed price target of $9.97.
Based on the current PointsBet share price, this implies 90% upside over the next 12 months for investors.
What is Goldman saying
Goldman was pleased with PointsBet's second quarter update and particularly its stabilising market share in the United States.
It commented: "Overall US market share of 4.2% was pleasing, with trends stabilizing vs. 1Q despite only US$29.7 mn of marketing spend, which in our view remains low and showcases the strength and resilience of its US franchise."
The broker was also pleased with the performance of its Australian business which "continues to go from strength to strength, with Gross Win 44% ahead of GSe in 2Q."
All in all, this appears to give Goldman confidence on the future, which it feels is very bright thanks largely to its massive US opportunity.
Goldman explained: "Reiterate our Buy rating on PBH, with our thesis underpinned by i) PBH's leverage to the burgeoning US Sports Betting and Gaming market which we forecast to be a ~US$60 bn TAM opportunity at maturity, ii) our view that PBH remains well placed to capitalise given its in-house tech stack, iii) upside risk to long-run sustainable margins in Aus and the US, and iv) Scalability benefits ahead from NBCUniversal leads and broader coverage from state rollouts."
