Craig-Hallum analyst Ryan Sigdahl cuts goals on six gaming stocks


Posted: Jan 4, 2022, 10:56 p.m.

Last update on: January 4, 2022, 10:56 a.m.

Craig-Hallum analyst Ryan Sigdahl came out with broad commentary on gaming stocks today, slashing price targets on six names.

game actions
Slot machines at a Penn National casino. Craig-Hallum analyst Ryan Sigdahl lowered price targets for six gaming stocks, including Penn. (Picture: The street)

While the analyst isn’t blatantly bearish on stocks, he is refining the price outlook on six companies – all of which have ties to online casinos and online sports betting. That group includes DraftKings (NASDAQ: DKNG) and Penn National Gaming (NASDAQ: PENN), which are two of the most severely punished gaming stocks of the past year.

While maintaining a “buy” rating on DraftKings, Sigdahl slashes his price target on that stock to $ 51 from $ 70, joining a growing list of analysts who are lowering price predictions on the sportsbook operator in line. On the bright side, the analyst says online sports betting is a megatrend that is still in its infancy and the scarcity of ways to play this trend are good points for DraftKings.

He believes the operator can strengthen iGaming’s market share and earnings before interest, taxes, depreciation and amortization (EBITDA) ahead of its previously announced guidance.

Penn not fully appreciated

Of the six companies that receive lower price estimates from Sigdahl, Penn National is the only one to operate land-based casinos.

In fact, the company is the largest regional casino operator in the United States. Craig-Hallum analyst cuts his Penn price forecast to $ 96 from $ 130 while acknowledging that casinos provide strong cash flow that Penn can use to fund internet investments, including Barstsool Sportsbook.

While Penn has been synonymous with David Portnoy Sport Bar Stool for two years after taking a 36% stake in this media property in January 2020, Sigdahl says the marriage of Bar stools Penn’s dedicated fan base, favorable demographics, marketing prowess and multi-state footprint “create an unmatched omnichannel offering.”

Penn stock was repudiated last year and is 65.44% below its 52-week high, but some analysts are highlighting it as a candidate for a rebound in 2022.

A multitude of game technology actions are reduced

Sigdahl is also axing its pricing targets on sports betting data providers Genius Sports (NYSE: GENI) and Sportradar. It lowers the former to $ 22 from $ 27 and the latter to $ 30 from $ 35.

He notes that both companies continue to post impressive compound annual growth rates and strong EBITDA margins. The analyst adds that the two companies compare favorably to traditional big data vendors and offer greater margin expansion potential compared to companies rooted in the data space.

Speaking of gaming tech names, Sigdahl is reducing its price target on GAN (NASDAQ: GAN) to $ 14 and $ 18. While he likes the short-term trends for the gaming software vendor, he adds that GAN could face competitive threats as its model evolves to include greater exposure to business-to-consumer customers.

Sigdahl’s other gaming action lowers its price estimate on Rush Street Interactive (NYSE: RSI). The analyst goes from $ 22 to $ 19 on this stock while maintaining a “buy” rating on the online sports betting operator and iGaming.