Those who bet on DraftKings Inc.’s stock have won big this year, and analysts see more big gains ahead.
DraftKings shares
DKNG,
on Friday surged to their best single-day performance in nearly a year, rising 16.5% on the heels of a stronger-than-expected earnings report and an upbeat outlook. They’re now up 196% so far in 2023.
See more: DraftKings’ stock pops on narrowing loss, raised fiscal year revenue guidance
The online sports-betting company has been winning market share and improving its path to “real profitability,” according to MoffettNathanson analyst Robert Fishman. In the meantime, the company’s outlook for $350 million to $450 million in 2024 adjusted earnings before interest, taxes, depreciation and amortization easily cleared the consensus view.
“[W]e still expect DraftKings’ momentum to continue into next year, driving sustained, robust top-line growth along with a heightened focus on strategically reining in expense growth,” Fishman wrote. “Together, this puts DraftKings on the cusp of a meaningful inflection in profitability with our conviction in the DraftKings story stronger than ever.”
He upped his price target by a buck to $38 while keeping a buy rating on the stock.
Daniel Politzer of Wells Fargo chimed in that the company is “firing on all cylinders” as it picks up market share and momentum while boosting its operating scale.
“We think DKNG’s investor appeal will broaden,” Politzer wrote, as long-term investors should come to appreciate a further inflection in Ebitda as well as attractive industry dynamics.
He rates the stock at overweight and boosted his target price to $39 from $37 Friday.
Piper Sandler’s Matt Farrell pointed out that the next big catalyst will be the company’s Nov. 14 investor day.
“To us, it doesn’t appear any of the tailwinds the company is experiencing on either the revenue or cost side are deteriorating, and we look forward to the investor day in a few weeks to gain more insight into the go-forward strategy,” he wrote. “Over the next weeks, we suspect investors will remain focused on the competitive dynamics across the industry, but we think nothing to date has suggested DraftKings won’t at least maintain their share.”
While ESPN Bet launches soon, Farrell thinks DraftKings “should continue to be a leader in the market.”
He rates the stock at overweight and increased his price target to $40 from $35 in a Friday report.
From the archives (August 2023): Penn dumps Barstool for ESPN-branded sports-gambling service
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