In a wide-ranging January 16 investor note, J.P. Morgan analyst Joseph Greff cited North American online sports betting and igaming as his top growth picks for the new year. He singled out DraftKings as the best purely digital stock play.
Greff’s favor of DraftKings was described as “based on its attractive revenue growth profile and an ability to leverage its scale and strong competitive position in the U.S.” Igaming and sports betting alike, he predicted, would see more rational expenses, improving profit margins and cash flow. As for DraftKings’s 2026 revenue growth forecast of 17 percent, Greff didn’t find that excessively optimistic.
In addition to DraftKings, Greff smiled on Penn Entertainment, which he admitted was a contrarian view. He allowed that its stock had underperformed significantly since 2021, its cash flow was low, and growth from four new capex projects would be modest, but said expectations for igaming and controversial ESPN Bet were reasonable.
Looking to Las Vegas, Greff perceived risk to MGM Resorts International, Caesars Entertainment, Station Casinos, and Boyd Gaming, due to “stubbornly high estimates and a lack of fundamental catalysts, reacting to a challenging setup.” Regionally, Greff saw hazards to Caesars in the form of five percent or smaller declines in revenue, prompted by new competitors.
The analyst was Overweight on all gaming stocks except Boyd and Macau-centric Melco Resorts & Entertainment. Wynn Resorts, for instance, he felt was swimming upstream against “a challenging setup” on the Las Vegas Strip, stagnation in Macau, and a lack of appreciation for its United Arab Emirates prospects.
Similarly, Greff would be a buyer on any retreat in MGM shares, due to a lack of value placed on MGM’s development slate (including Japan). He found MGM’s liquidity and capital profile potent, allowing it to invest in significant new markets like New York City and Osaka.
Greff predicated his overall optimism on the contrarian thesis that gaming companies perform better in election years. He added that gaming stocks tend to improve their performance in the year following a change of administration in Washington, D.C.
