DraftKings (NASDAQ: DKNG) shares have already greater than doubled towards the beginning of 2023, however at the very least one analyst believes the sportsbook firm’s share worth might fetch extra upside. I am watching it.
Gaming shares have extra gasoline of their tanks, UBS analyst Robin Farley stated in a word to shoppers at the moment. He upgraded the Draft Kings to Purchase from Impartial whereas elevating his worth goal on the namesake to $30 from $19, suggesting a greater than 24% acquire from Might 19’s shut. .
Traders could marvel if the inventory is overvalued provided that DKNG is presently up +112% year-to-date, however given the accelerating good points in new states. , we consider there’s potential for additional will increase. “ Farley wrote.
Traders are open to constructive feedback from analysts. In noon buying and selling, the DraftKings inventory was up 8.83% in quantity, nearly double its each day common. At present’s intraday excessive of $26.41 represents the very best worth since mid-January 2022.
Rising margins and earnings might assist DraftKings share worth
The Draft Kings are gaining assist from new states, specifically Ohio and its dwelling state of Massachusetts, the place they’re primary by way of market share. Kentucky and Puerto Rico will seemingly be the one states to hitch the record of states the place cellular sports activities betting is authorized for the remainder of the 12 months.
This implies there’s restricted excellent news on the legislative entrance, however DraftKings has different catalysts at its disposal, reminiscent of growing income and increasing revenue margins. Farley expects the corporate’s 2023 gross margin to rise 50 foundation factors to 39.3% this 12 months and will attain 40% subsequent 12 months. With the assistance of current clients embracing greater holds and new betting merchandise, the DraftKings can ship vital compound annual progress in income.
“We consider DKNG can obtain +20% income (compound annual progress fee) from 23E to 26E. , has raised its 2023 income forecast to $3.19 billion from its earlier $2.91 billion, and expects DKNG to attain a +20% income CAGR by way of 2026. The 2026 income forecast is $5.54 billion, higher than Avenue’s $5.36 billion,” UBS analysts stated.
His income forecast of $3.19 billion is simply above the corporate’s revised midpoint of $3.185 billion introduced earlier this month.
Present nations additionally assist Draft King
Whereas observers of the sports activities betting business are always questioning which states will legalize subsequent and when the giants of California, Texas and Florida will be part of, the Draft Kings have been held for a very long time. The states which have been with us shouldn’t be misplaced. shuffle.
In most jurisdictions, DraftKings lags rival FanDuel by way of market share. Farley famous, nonetheless, that states through which the corporate operated earlier this 12 months had greater gross recreation income (GGR) per participant.
Aside from this, one other driver for DraftKing shares may very well be brief masking. With brief rates of interest on the inventory at 7.22%, a few of these merchants could also be enjoying with fireplace if the inventory continues its already intense 2023 tempo..
