- Bank of America breaks down sports betting valuations after a recent stretch of selling on some favored names in the sector.
- Analyst Shaun Kelley and team believe think that most of the revaluation by investors is market-related vs. fundamental as other high-growth sectors and stocks also fell sharply from their high. Still, fundamental concerns are noted, including a weaker seasonal sports calendar, waning state legislative momentum and increasing competition heading into the crucial important NFL season.
- That last point is worth watching. Competition is heating up with Caesars Entertainment (NASDAQ:CZR) and Bally's (NYSE:BALY) launching sports betting apps in multiple states, while Rush Street Internactive (NYSE:RSI) and Golden Nugget Online Gaming (NASDAQ:GNOG) investing more in iGaming cross-selling. Meanwhile, DraftKings (NASDAQ:DKNG) and MGM Resorts/Bet MGM (NYSE:MGM) are expected to invest heavily in nabbing market share.
- Taking it all in, BofA points to some attractive opportunities in the gaming sector at present levels, including Buy-rated Boyd Gaming (NYSE:BYD), Churchill Downs (NASDAQ:CHDN) and Penn National (NASDAQ:PENN). All those names are noted to be meaningfully cash flow positive today and are seen being structurally sound for even better margins after COVID, while also having optionality and upside for the sports and digital themes.
- Earlier today, JPMorgan turned some heads with a bullish note on MGM Resorts.