Entain PLC (LON:ENT) offers the best odds for UK investors in the US online gaming market according to a new assessment on the size of the potential market from JP Morgan.
The broker says estimates of the total addressable market (TAM) for US online gaming vary greatly, with its figure of US$14bn at the bottom of the range.
Flutter recently raised its US TAM estimates to sit alongside Entain at between $19- 20bn while Draftkings recently raised its longer-term estimate to US$62bn.
Working through the implications of these forecasts, JP Morgan says that would suggest market values of £12bn for Flutter and £3bn for Entain based on its estimates.
Flutter/Entain’s TAM estimates would mean 36% potential upside for Entain and 21% for Flutter, adds the bank.
JP Morgan adds, however, it sees no reason to change its low-end TAM forecast as it sees tailwinds from lockdown easing, tough comparators and the possibility New Jersey might be skewing the numbers upwards.
Entain has been upgraded to ‘overweight’ with a price target of 1,852p, 888 Holdings PLC (LON:888) has been downgraded to neutral (400p) after a strong run recently while Flutter (LON:FLTR) is rated neutral with a price target of £16,233.
Shares in Entain rose 2% to 1,540p.