Posted on: July 12, 2023, 01:13h.
Final up to date on: July 12, 2023, 01:48h.
DraftKings (NASDAQ: DKNG) prolonged its July rally Wednesday on the again of bullish feedback from Financial institution of America analyst Shaun Kelley.
In noon buying and selling, the inventory is larger by 5.32% on quantity that’s already exceeded the each day common. That extends its features over the previous week to 16.56%, and its surge over the previous month to just about 22%. In a observe to purchasers, Kelley upgraded DraftKings to “purchase” from “maintain” whereas boosting his value goal on the shares to $35 from $25. That suggests upside of 18.6% from the July 11 shut.
Whereas DKNG has outperformed in 2023, we predict market share features can drive each Q2 ’23 and near-term high line revisions (although seemingly anticipated) whereas value leverage will seemingly drive larger revisions in adjusted earnings earlier than curiosity, taxes, depreciation, and amortization (EBITDA) and margins than anticipated,” wrote Kelley.
DraftKings is larger by 167% year-to-date. It’s a surge Kelley stated is fueled partially by a extra speedy tempo of sports activities betting launches within the states approving the exercise and the operator producing an more and more bigger sports activities wagering maintain.
Good Time for DraftKings Inventory Rally
There’s by no means a foul time for a inventory to rally. However within the case of DraftKings, the latest transfer to the upside is especially well-timed, as a result of the Boston-based firm is predicted to ship second-quarter outcomes on August 4.
DraftKings hovering into its earnings could possibly be a optimistic signal, significantly for a inventory with a monitor document of constructing giant strikes following monetary updates. On a associated observe, the final 20 earnings per share (EPS) revisions on the inventory by analysts have been of the bullish selection. Kelley factors to the operator’s potential to raised handle prices, resembling advertising and marketing and promotional spending, as a catalyst for the shares.
“DraftKings has additionally reached a key value inflection in its younger enterprise mannequin, as we imagine the speed of progress in value of income and exterior advertising and marketing have peaked,” added the analyst.
Kelley can also be bullish on the expansion trajectory of the web sports activities betting market within the US, noting it’ll develop 35% on a year-over-year foundation in 2023. That’s whereas posting a compound annual progress charge of 15% from this 12 months by 2027.
Wall Road More and more Bullish on DraftKings Inventory
Kelley’s report provides to a spate of not too long ago optimistic Wall Road commentary on DraftKings inventory. At present, 33 analysts cowl the title, with 18 ranking it the equal of “purchase” or “sturdy purchase.” The typical value goal is $28.74, which is under the place the inventory trades right now, indicating there’s room for upside revisions to that quantity.
Talking of upside potential, Oppenheimer bumped its value forecast on the gaming fairness to $36 from $30 final week, whereas BTIG Analysis anointed DraftKings a high decide for the second half of 2023.
“DraftKings is predicted to profit from favorable fundamentals in 2023, together with product enhancements, an rising parlay combine, a optimistic working backdrop, and improved effectivity, which may drive important upside in estimates and optimistic revisions,” in line with BTIG.