Collectors Dashboard generally focuses on collectibles, but as we evaluate high-end collectibles as an alternative asset class this means that the same capital could have just as easily been invested in stocks, bonds and other more traditional assets. This begs a question considering that many people who collect sports cards and memorabilia are also into sports betting — is investing in sports betting as of today a more lucrative investment than investing in collectibles or the S&P 500?

Please note that this view and upside call is from an outside analyst call. As with all research calls, they are only based on a snapshot as of set time and the opinions may change or prove to not be accurate. Please see the reminder and disclaimer below.

IS 60% OR 90% IMPLIED UPSIDE JUSTIFIABLE?

JMP analyst Jordan Bender issued new Outperform ratings on DraftKings Inc. (NASDAQ: DKNG) and in Penn National Gaming (NASDAQ: PENN). These stocks have both seen significant bounces from their lows earlier in June, but both remain absolutely battered and ravaged from their 2021 highs. For the current DraftKings price of $13.10, the analysts target price of $25.00 would imply 90% upside. The new $52 price target for Penn would imply 61% upside from the current $32.25 share price.

It is worth noting that the analyst calls here have not led to a rally at the present time. Then again, profit taking after the recent surge has brought on more than a 2% sell-off this day in the NASDSAQ.

THE DRAFTKINGS CALL

According to JMP’s Bender, iGaming is the obvious cross-sell for DraftKings with its products like Rocket and Spanish21. These are variations of real-life casino games which are played online and Bender believes that these can use their marketplaces to offer other services like selling sports apparel despite targeting a slightly different demographic.

DraftKings’ market exposure was also touted handily while online betting continues to grow and continues to add more states where it’s legalized in the United States. He expects that DraftKings should also maintain its market share as a top-three destination. Another boost is the partnership with micro-betting company SimpleBet.

THE PENN NATIONAL GAMING CALL

As for Penn National Gaming, JMP’s Bender sees the leveraged position with the casino database and assets like Barstool Sports and TheScore leading to cross-selling over different customer groups and with a lower customer acquisition cost.

Bender also pointed out an expected upside even if that dreaded recession comes to pass. That view is because casinos traditionally are not all that impacted by inflation, gas prices and economic downturns. The regional casino and the entertainment for a relatively low cost bolsters that view.

THE RELATIVE VALUATIONS ARE NIGHT & DAY

Penn Gaming is at least profitable, but DraftKings has been burning capital to fund growth. The consensus analyst estimate among all analysts is that DraftKings is expected to post continued fiscal losses at least through the remainder of 2022 and at least into 2023.

The consensus analyst price targets ahead of these calls were $57.00 for Penn (versus $52 from JMP) and $28.02 (versus $25 from JMP).

DraftKings still has a $5.6 billion market cap despite being down 80% from its 2021 highs, and Penn National has a $5.4 billion market cap despite a drop of more than 60% from its highs.

Neither DraftKings nor Penn National Gaming pay dividends. DraftKings’ path toward profitability in the future means it effectively couldn’t pay a dividend to its shareholders any time soon even if it wanted to.

JUST LIKE GAMBLERS, YOU MIGHT LOSE (YOUR SHIRT!)

Please keep in mind that analyst calls are not always right. These analysts have opinions which may be a polar opposite from other analysts. And many analyst calls flop because of bad information or simply because the base expectations fail to materialize. If investors believed that these analyst calls came with any guaranteed profits or upside then these stocks probably would have risen handily rather than sold off with a broad profit-taking trend on Tuesday.

No investments come with assurances nor with guaranteed profits. And with all investing decisions, you are on your own. Just remember that as you buy a stock thinking you are going to make money, the seller in that same transaction is either looking to prevent further losses or is worried the stock may fall or underperform the market.