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The PointsBet Holdings Ltd (ASX: PBH) share price has been having a tough week.
The sports betting company’s shares fell heavily again on Thursday, stretching their week to date decline to over 26%.
This follows the release of PointsBet’s full year results on Wednesday, which revealed even larger losses.
Is the PointsBet share price weakness a buying opportunity?
While the weakness in the PointsBet share price has been disappointing for shareholders, one leading broker believes it could be a buying opportunity for the rest of us.
According to a note out of Bell Potter, its analysts have retained their speculative buy rating and $5.25 price target on the company’s shares.
Based on the current PointsBet share price of $2.44, this implies potential upside of 115% for investors over the next 12 months.
What did the broker say?
Bell Potter was pleased with PointsBet’s performance in FY 2022, noting that its revenue was in line and its sizeable loss of $267.7 million was better than it was forecasting ($314.4 million).
And while the broker isn’t expecting PointsBet to be profitable for several years, it believes the company is sufficiently funded (including its bonus options) to get through to breakeven. It explained:
We continue to forecast positive EBITDA is achieved in FY26. Note we now assume the company exercises the deferred bonus equity option and raises $150m in FY24 at an issue price of $3.00 (so 50m shares are issued). With this raise our forecasts suggest the cash balance remains positive though admittedly it gets tight by the end of FY25.
In light of this, it is focusing more on the company’s strong long term growth potential thanks to its massive opportunity in the United States. It commented:
PointsBet is pursuing a very large opportunity in the sports betting market in North America. The market is still very much in its infancy as, until recently, sports betting was prohibited in the US and Canada and states/provinces across both countries are only now – or recently – introducing legislation which allows a limited number of licensed operators to provide sports betting. PointsBet is aiming to be one of the leading providers (i.e. top 5) of online sports wagering in at least 17 states across the US and one province in Canada over the next two years. The size of sports wagering market in the US alone is estimated to be b/w US$8-10bn in 2025.
All in all, this could make PointsBet one to consider if you’re a patient long term focus investors. Especially with the PointsBet share price now down 76% over the last 12 months.
