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- CBRE Equity Research starts off sweeping coverage in the U.S. casino, sports betting and iGaming sector with Hold ratings on DraftKings (DKNG +3.0%) and Penn National Gaming (PENN +2.4%).
- Analyst John DeCree is cautious on the technical outlook for DKNG even after the recent share price drop. He notes that DKNG continues to execute well on a fundamental but faces a wave of new competition with deep pockets. DeCree still looks the long-term potential for DKNG.
- In regard to Penn (NASDAQ:PENN), DeCree and team derive a $60 per share valuation based on a sum-of-the-parts evaluation. Negative headlines around Barstool founder Dave Portnoy are noted to have held back institutional capital at least for the very short term.
- Both DKNG and PENN are being watched closely for inflection points to take the rating to Buys.
- Meanwhile, the favorable backdrop for the U.S. gaming industry has DeCree and team more enthusiastic on casino real estate and gaming REIT stocks. DeCree continues to recommend shares of both Buy-rated VICI Properties (VICI +2.6%) and Gaming and Leisure Properties (GLPI +1.0%), with a preference for VICI due to its "unique company-specific catalysts ahead" including a substantial increase in scale and a prospective credit ratings upgrade.
- Read about some of the other new Buy-rated stocks at CBRE from the sports betting/iGaming sector.