Shares cooled at the moment, closing 1.63% decrease, however DraftKings (NASDAQ: DKNG) obtained at the very least 10 rounds of optimism from sell-side analysts within the second buying and selling day after elevating the corporate’s 2023 earnings steering. Earned a bullish worth goal revision.
Final Thursday, the sportsbook operator raised its 2023 gross sales forecast midpoint to $3.185 billion from $2.95 billion, however this 12 months’s anticipated earnings earlier than curiosity, taxes, depreciation and amortization are down. We estimate the midpoint loss (EBITDA) to be $315 million. From $400 million. This, mixed with constructive feedback from administration on his Could convention name with analysts, prompted a collection of worth goal hikes at the moment.
One space that impressed some analysts was DraftKings’ new management within the iCasino house, aided by its acquisition of Golden Nugget On-line Gaming (GNOG).
Turning to iCasino, the acquisition funnel offered by the energy of OSB and the addition of the GNOG buyer database contributed to a market share enchancment of round 590 bps in Q1 2023 in comparison with Q1 2022. I believe I did. “OSB’s buyer base, which is deeper than its friends, favors DKNG in iCasino’s battle towards its friends, however competitors from present friends within the section, particularly in mild of restricted new legislative efforts.” I anticipate it to accentuate.”
He maintains a “pending” score on DraftKings, however has elevated the value outlook for the identify from $15 to $22.
Product enchancment could possibly be a catalyst for DraftKings
Right now, solely Kentucky and Puerto Rico are thought-about possible additions to the stay and authorized US sports activities betting panorama for the rest of 2023. Moreover, operators reminiscent of DraftKings have the burden of decreasing advertising and marketing and promotional spending. .
As such, one of many key catalysts for DraftKings and its rivals is leveraging new merchandise, together with same-game parlays, to draw and retain prospects. Stifel analyst Jeffrey Stantial noticed that DraftKings’ improved same-game parley service has helped the operator retain extra prospects after his soccer season ends. .
“With DraftKings launching its new in-house priced stay SGP for the 2022/23 NBA season, consumer retention throughout the soccer and basketball seasons is considerably above Y/Y given a lot of our earlier steering. improved,” wrote the analyst.
He additionally raised DraftKings’ worth goal from $23 to $25, score it “Maintain.” Three of his goal will increase in gaming shares exceeded $30 for these estimates. Canaccord goes from $30 to $34, Susquehanna goes from $28 to $36, Guggenheim raises DraftKings goal from $27 to $32.
Bearish Analyst Reluctantly Raises DraftKings Value Goal
Even DraftKings’ Bear Roth MKM analyst Edward Engel attended the DraftKings goal increase occasion, however not in an excessively enthusiastic style. Engel, who maintained the inventory’s “promote” score, raised his inventory worth forecast to $18 from his $15.
In a notice to shoppers, analysts warned that DraftKings’ income and EBITDA progress may gradual considerably in 2024 and 2025..
