Sports betting company DraftKings Inc DKNG lands an updated rating and price target from an analyst, which comes after the company recently reported quarterly financial results.
The DraftKings Analyst: UBS analyst Robin Farley upgraded shares of DraftKings from Neutral to Buy and raised the price target from $19 to $30.
The Analyst Takeaways: UBS is upgrading shares of DraftKings after its recent earnings report, with greater visibility seen for revenue growth and the path to profitability.
“We see runway for DKNG to deliver a +20% revenue CAGR from ‘23E to ‘26E given that the company is penetrating new states faster, seeing improvements in structural hold, and existing state vintages are growing attractively with higher GGR per player,” Farley said.
Related Link: EXCLUSIVE: DraftKings CEO Says 'We're Seeing Really Strong Trends' After Q1 Beat, Guidance Raise
The analyst said that DraftKings showed strong results in new state launches, which suggests that this could continue into the future.
“DKNG saw their new state launches in 2022/23 penetrate 3.4% of the adult population within 30 days, from the 0.6% penetration rate in the first 30 days that DKNG had in states that legalized in 2018/19 and up from the 1.1% penetration rate DKNG had in its first 30 days in states that legalized in 2020/21.”
DraftKings also showed a stronger hold rate in the recently reported quarter, which was highlighted by the analyst.
Farley said that higher gross gaming revenue per user is also part of the reason for the upgrade.
With shares of DraftKings up over 100% year-to-date in 2023, the analyst sees higher share prices coming.
“Investors may wonder if the stock is expensive given that DKNG is now up +112% YTD, but we believe further upside is possible given the faster ramp in new states.”
DKNG Price Action: DraftKings shares are up 6.9% to $25.77 at the time of publication on Monday.
Hear from DraftKings CEO Jason Robins as a featured speaker at the Benzinga Sports Betting Titans virtual event on May 24.
Photo: Shutterstock
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