The PointsBet Holdings Ltd (ASX: PBH) share price is having another disappointing day.
In morning trade, the sports betting company's shares are down 13% to $3.62.
This means the PointsBet share price is now down by almost 50% since the start of the year and 75% over the last 12 months.
Why is the PointsBet share price sinking today?
Today's decline by the PointsBet share price appears to have been driven by a combination of weakness in the tech sector and the release of a broker note out of Goldman Sachs this morning.
In respect to the latter, Goldman has been one of PointsBet's biggest supporters over the last couple of years.
For example, when the broker initiated coverage on PointsBet in March 2021, it put a buy rating and $17.50 price target on the company's shares.
Unfortunately, since then, although the broker has continued to hold onto its buy rating, its price target has been moving lower and lower.
So much so, approximately two years after initiating coverage on PointsBet, this morning the broker retained its buy rating but slashed its price target by a further 32% to $6.74.
And while this price target continues to offer significant upside for investors, it appears as though the market is concerned that it will eventually be cut lower like previous targets.
Why has its price target been slashed?
Goldman explained that it made the move to reflect a de-rating of peer multiples and lower earnings estimates.
It commented: "Overall we have made some minor EBITDA changes across FY22-23E by -3/-2%, and larger 16% cuts in FY24 in account of further costs associated with planned state rollouts. Our MT to LT forecasts remain largely unchanged, premised on our house US$61 bn US TAM; however our 12-mo TP (SOTP based) falls to A$6.74 (from A$9.97 prior) driven by a MtM of peer multiples, consistent with our US Gaming revisions overnight."
"Given the significant multiple compression of high growth names and the OSB sector, we now value PBH's US business at maturity at 12.5x FY30 EV/EBITDA (discounted back at 10.4%, Cost of equity). Consistent with prior, we continue to apply a 5x discount to PBH's US franchise vs. our US team's revised DKNG 17.5x multiple," Goldman added.
