DraftKings Inventory Has Recipe for Upside, Says Cowen Analyst

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Posted on: Could 3, 2021, 10:07h. 

Final up to date on: Could 3, 2021, 10:07h.

DraftKings (NASDAQ:DKNG) inventory is buying and selling modestly larger Monday with the assistance of a sell-side improve.

DraftKings stock
DraftKings CEO Jason Robins. Analysis agency Cowen sees appreciation coming for the inventory. (Picture: Getty Pictures)

Cowen analyst Stephen Glagola boosts his score on the each day fantasy sports activities (DFS) supplier to “outperform” from “market carry out” whereas lifting his worth goal on the title to $70. That means upside of 23.5 % from the April 30 shut. In his new enthusiasm for the inventory, Glagola cites a well-known catalyst.

Present legalization traits recommend to us that the 2H:21-FY22 interval stays strong, and will lead to DKNG being dwell in states representing as much as 51.2% of the grownup inhabitants by 2022 finish,” he mentioned in a notice to purchasers.

Glagola is the second analyst prior to now two buying and selling days to come back to the rescue of DraftKings inventory — a reputation mired in what’s now a prolonged hunch. The shares misplaced 7.61 % in April and reside 23.21 % beneath the 52-week excessive notched in March.

For DraftKings Inventory, Market Share Issues

Within the fiercely aggressive on-line sports activities betting trade the place operators similar to DraftKings spend closely to accumulate prospects, analysts and buyers are scrutinizing how effectively these expenditures payoff when it comes to market share.

Broadly talking, DraftKings is adept at establishing share. Though it loses cash and is unlikely to be worthwhile previous to 2022 or 2023, it’s the second-largest US on-line sportsbook operator behind solely FanDuel.

“In Q1:21, we’ve got seen state-by-state market focus solidify across the prime 4 operators the place collective OSB deal with share exceeded 90% in West Virginia (99.7 %), Indiana (92.5 %), Iowa (92.9 %), Illinois (98.3 %), Michigan (90.6 %), and Virginia (99 %),” mentioned Cownen’s Glagola, stating this development is a optimistic for DraftKings.

Nonetheless, there’s concern that DraftKings is probably susceptible to ceding the quantity two spot to BetMGM. The 50/50 three way partnership between MGM Resorts Worldwide (NYSE:MGM) Entain Plc (OTC:GMVHY) is quick including market share in marquee states and is aiming for a 20 % to 25 % total share of the North American iGaming and sports activities betting segments.

DraftKings Making Strikes

Analysts and buyers primarily view DraftKings by way of the lens of on-line sports activities wagering. Whereas that take is correct, the operator has different traits that might make it interesting to buyers over the long-term.

DraftKings is seen as potential power on this planet of in-game betting — an idea that hasn’t taken off but within the US, however one analysts anticipate will morph into a significant development alternative for operators within the years forward.

Moreover, the Boston-based firm has its expertise operation — SBTech — in home, defraying prices related to farming that enterprise out to third-party distributors. DraftKings can also be utilizing acquisitions to maneuver additional into the media realm — strikes that diversify its product portfolio and income stream whereas probably decreasing buyer acquisition prices.



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