DraftKings Inventory Will get Enhance From Barclays Improve

Posted on: February 23, 2024, 10:36h. 

Final up to date on: February 23, 2024, 10:48h.

Shares of DraftKings (NASDAQ: DKNG) surged in early buying and selling Friday, extending a run that’s seen the inventory achieve greater than 10% over the previous month. That’s after Barclays analyst Brandt Montour upgraded the gaming fairness.

New York iGaming lottery online
A DraftKings Sportsbook commercial above the Grand Central subway station in New York Metropolis. The inventory rallied Friday on an improve from Barclays. (Picture: Crain Communications)

In a be aware to shoppers right now, Montour upgraded DraftKings to “obese” from “equal weight,” whereas boosting his worth goal on the inventory to $50 from $41. That new forecast implies upside of twenty-two.4% from the Feb. 22 shut.

We’re much less involved than we had been 3-6 months in the past over elevated competitors, and see the ~10% pullback off the highs publish its (sturdy) 4Q report as a pretty near-term entry level,” noticed the analyst.

Montour is amongst roughly 10 analysts who’ve boosted worth targets on DraftKings over the previous week. Of the 30 analysts protecting the inventory, 21 fee it “sturdy purchase” or “purchase.” The consensus worth goal of $46.82 implies upside of 11.29% from present ranges.

DraftKings Staying Energy, Development

Within the ultra-competitive US sports activities wagering trade, DraftKings and rival FanDuel, a unit of Flutter Leisure (NYSE: FLUT), have separated themselves from the pack, forming a duopoly that controls about 70% of the market.

As Montour notes, that means DraftKings has important “endurance” in that area. However the operator’s management within the iGaming house is arguably underappreciated. In noting that on-line sports activities betting and web casinos are “synergistic” with one another, the analyst lifted his whole addressable marketplace for these industries by 1% to three% over the subsequent a number of years.

Montour additionally hailed DraftKings’ lately introduced $750 million money/inventory deal for on-line lottery supplier Jackpocket as a transaction that might add incremental momentum. That acquisition is predicted to shut within the second half of this 12 months.

“Jackpocket is the main supplier of digital lottery companies within the U.S., with proprietary and highly-scalable expertise, a powerful model, and an excellent founder-led administration staff,” based on an announcement issued by DraftKings earlier this month. “The Proposed Transaction will allow DraftKings to entry and develop into the large U.S. lottery trade. However extra importantly, strengthen its place in Sportsbook and iGaming by way of larger buyer lifetime worth — primarily based on demonstrated cross-sell capabilities — and an enhanced buyer acquisition engine.”

Potent Parlays

Parlays, together with these of the same-game selection, are one other think about Montour’s bullish case for DraftKings inventory. The analyst famous same-game parlays can enhance the operator’s profitability, bolster maintain, and are among the many causes the corporate lately raised 2024 earnings and income steering.

Operators equivalent to DraftKings supply prepackaged same-game parlays with lengthy odds which are hits with novice bettors. Purchasers can even construct their very own. Each situations work in favor of gaming firms

Many bettors take a lottery ticket mentality towards parlays, stacking legs in a quest for a giant payday. In fact, the percentages lengthen with every added leg, and that’s good for the sportsbook, not the bettor. Including to some great benefits of parlays for sportsbooks is the purpose that many bettors merely don’t perceive the mathematics behind these wagers.

Related Articles

Latest Articles