If you dabble in the stock market, then you should seriously consider purchasing some shares of Amaya Gaming. The company saw their stocks skyrocket by 30% following news of PokerStars and Full Tilt being approved for New Jersey licenses. This is just more great news for Amaya, on top of finally gaining a legal foothold in America. And what’s amazing is that this might not be the end of the company’s stock surge. See what one prominent analyst told CNBC regarding what to expect from Amaya in the future.
The “Valuation” of Amaya changes Greatly
As many poker players know, New Jersey and its 8.9 million residents are only a blip on the international online poker radar. So it’s little surprise that Chad Benyon, a respected gaming analyst for Macquarie, doesn’t see PokerStars New Jersey making a big impact in terms of earnings. However, he does see it as a “stamp of approval” among investors.
“From a financial perspective, it’s not that big of a needle-mover,” said Benyon. “But what it really does is it kind of puts a stamp of approval on this company – who they are from a global perspective, and more importantly who they are in the eyes of one of the most-critical and respected regulatory gaming boards in the U.S.”
“So nothing will really change that dramatically near term to the fundamental story, which we think is one of the better stories in the gaming industry,” Benyon added. “But what we think will change is the valuation and the multiples that will be ascribed to this company.”
Expect Online Poker to remain Flat for 3 Years
Online poker hasn’t really been growing over the last few years, with a large part of this being that Black Friday took many Americans out of the global player pool. So it’s little surprise that Benyon doesn’t see Amaya’s bread and butter accelerating much, despite recently getting into New Jersey.
“Amaya is the world’s largest poker company,” he said. “We think that business will be roughly flat over the next few years. Their mission right now is to expand into sports and casino outside of the United States, and that business will be roughly 50 percent of their overall business in three years.”
“In the United States, there’s been some fits and starts with regulation,” continued Benyon. “A few of the bigger states, namely California, they’ve actually talked about legislation for six years now. But because there were still some uncertainties from a federal standpoint if poker is a game of skill or game of chance, and also given this ruling – what’s going on with Amaya – legislators don’t really want to voice their opinion too loudly.”
Amaya’s Stock has a Lot More Potential
While the 30 percent boost in Amaya Gaming’s stock is nice, this might only be the beginning of their upward trend. CNBC asked Benyon how high he sees their value going forward, and he sees plenty of upside here.
“So we have a $40 U.S. target, and a $50 Canadian price target,” Benyon explained. “The stock is dual listed, just came down to the NASDAQ a few months ago, so it’s a new name for investors down here. We believe that the earnings can double over the next three years and using a valuation that’s in line with companies that are growing at the same pace – that’s kind of how we arrived at our $40 price target. So we see this stock as a double…you just kind of have to be patient and stick through some of the catalysts, and we think this New Jersey announcement (is one), and the first of many to come.”
Many see Amaya/PokerStars as the power that drives the iPoker industry. And while Benyon doesn’t seem optimistic that PokerStars’ foothold in the U.S. will boost the industry much right now, it’s at least good that the company as a whole should greatly increase its success.