The PointsBet Holdings Ltd (ASX: PBH) share price started from humble beginnings in June 2019 at an initial public offering (IPO) price of $2.00 and market capitalisation of $220 million.
Its shares have since surged more than 7- fold, resulting in the company joining the S&P/ASX 200 Index(ASX: XJO) back on 27 January 2021.
The bookmaker is taking the emerging United States sports betting market head-on and is currently operational in Australia and 5 US states. Despite its significant share price run, Bell Potter thinks there's plenty of growth left for the PointsBet share price.
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Bell Potter retains speculative buy rating
Bell Potter is bullish on the PointsBet share price, retaining a speculative buy rating with a $20.55 valuation on 16 March. At the time of writing, its shares are swapping hands for $14.44.
The broker highlights the company's recent acquisition of Banach Technology, a Dublin-based sportsbook solutions provider that has developed a proprietary risk-management platform and quantitative-driven trading models for operators. Bell Potter believes Banach will enhance PointsBet's technology platform to provide a superior betting experience.
PointsBet anticipates the size of the US in-play market to increase rapidly. Currently, the company estimates a 50/50 split between bets placed pre-game and in-play. Within three years, PointsBet anticipates that ~75% of bets will come from in-play betting products. The company believes that in-play clients are more valuable across key metrics, including higher engagement, higher retention and higher turnover.
Bell Potter sees Banach playing a pivotal role in driving "increased in-play betting turnover by reducing periods when betting is suspended during a live sporting match". Banach's technology capabilities are expected to complement PointsBet's competitive advantage in its breadth and depth of available betting markets.
Bell Potter analysts highlight that during the Super Bowl, PointsBet offered 765 different betting markets compared to its major competitors that only offered 248 to 543 markets.
Key assumptions for the PointsBet share price target
Bell Potter has made several assumptions for its bullish take on the PointsBet share price.
The broker assumes the company will start operations in West Virginia and Kansas by the end of 2021. It also forecasts that US states, including Kansas, Ohio, Missouri, Louisiana and New York, should legalise sports betting over the next three years.
PointsBet would be able to commence operations in these states through its existing partnerships.
