Wall Street Analysts Bullish on Gaming Stocks as NFL Kick-Off Spurs Interest
The start of the NFL season is expected to bring a surge in sign-ups and activity on sports gambling apps, leading Wall Street analysts to identify several gaming stocks with significant upside potential. With the NFL season underway, the excitement surrounding the games is likely to drive discussions on pregame shows and frequent promotions during commercial breaks. According to FactSet, the gaming stocks listed below have buy ratings from over 60% of analysts and are projected to exceed the average price target by more than 20%.
Caesar's Entertainment: A Multifaceted Player
Caesar's Entertainment stands out among the gaming stocks, with an average price target 37% higher than its most recent closing price. Analyst Brandt Montour of Barclays highlighted the potential for Caesar's to experience a boom in non-sports online gambling. The recent launch of its stand-alone iGaming app positions Caesar's to gain market share and capitalize on its retail casino footprint, loyalty programs, and expertise.
MGM Resorts International: Diversified Gaming Portfolio
MGM Resorts International is another company with a diversified gaming portfolio, offering a 33% upside, according to FactSet. Montour emphasized that MGM's market share leader, BetMGM, excels in content breadth, particularly in the slots category. This aligns well with its casino-first customer database, brand, and land-based presence.
Churchill Downs: Analysts' Favorite Pick
Despite its online betting platform TwinSpires representing a minor portion of its revenue compared to the Kentucky Derby, Churchill Downs receives a buy rating from 100% of analysts covering the stock, according to FactSet. This specialized company garners strong support from analysts, reflecting their confidence in its potential for growth.
While it is worth noting that gambling stocks have historically faced challenges once the NFL season begins, the recent legalization of online betting in the U.S. limits the available data. However, market leader DraftKings demonstrated strong performance during the opening weeks of the previous season, benefitting from favorable outcomes in NFL games. Needham analyst Bernie McTernan highlighted DraftKings' $70M benefit in 3Q23 and a $10M benefit in 4Q23 due to sports outcomes.
In conclusion, Wall Street analysts are optimistic about gaming stocks as the NFL season generates increased interest in sports gambling. Caesar's Entertainment, MGM Resorts International, and Churchill Downs are among the companies expected to benefit from this surge. While historical data is limited, DraftKings' previous success during the opening weeks of the season adds to the positive outlook. Investors should closely monitor these gaming stocks as the NFL season progresses.
Conclusion: The Impact of NFL Season on New Businesses in the Gaming Industry
The "hot take" on the start of the NFL season and its impact on gaming stocks provides a unique perspective on how this trend could influence new businesses, particularly those in the gaming and sports betting sectors.
Opportunities in Sports Betting
The surge in sign-ups and activity on sports gambling apps during the NFL season presents a significant opportunity for new businesses in the sector. The potential for growth and profitability is evident in the bullish sentiments of Wall Street analysts, who foresee significant upside potential for gaming stocks.
While there are opportunities, new businesses must also be aware of the challenges that come with the NFL season. Historical data suggests that gambling stocks have struggled during this period. However, the recent legalization of online betting in the U.S. and the strong performance of market leader DraftKings during the opening weeks of the previous season provide a more optimistic outlook.
In conclusion, the start of the NFL season presents both opportunities and challenges for new businesses in the gaming and sports betting sectors. The bullish sentiments of Wall Street analysts and the potential for significant growth offer a promising landscape for these businesses. However, they must also navigate the potential challenges that come with this period, underscoring the need for strategic planning and market analysis.