DraftKings Stock Has Catalysts, But Caution Warranted

Must read


Posted on: March 24, 2023, 04:14h. 

Last updated on: March 24, 2023, 04:22h.

Coming off a modest weekly loss, but still up 55.66% year-to-date, DraftKings (NASDAQ: DKNG) stock has reasons for investors to be cautiously optimistic, but the shares could tread water over the near term following the sizable jump to start 2023.

A DraftKings billboard appears at Times Square in New York City after the company went public in April 2020. An analyst sees reasons to like the stock. (Image: NASDAQ)

That’s the take of Deutsche Bank analyst Carlo Santarelli who, in a new report to clients, reiterated a “hold” rating on the online sportsbook operator with a $15 price target, well below Friday’s closing price of $17.73.

While the stock is likely to ebb and flow with quarterly results and bigger-picture equity and igaming-market news flow, we see shares as largely range-bound for the time being,” noted Santarelli.

The analyst’s $15 price forecast on DraftKings stock is well off the Wall Street average of $24.02, and he’s one of 11 analysts rating the shares “hold.” Three call it a “sell,” while 18 have the equivalents of “strong buy” or “buy” grades on the gaming name.

DraftKings’ Focus on Cost Reductions Commendable

Sports wagering stocks are currently in focus due to the NCAA Tournament — one of the most bet on events in the US — but when it comes to DraftKings, the points of emphasis for analysts and investors is the company’s ability to contain costs and reach profitability in 2024.

In February, Boston-based DraftKings boosted the midpoint of its 2023 revenue outlook to $2.95 billion from $2.9 billion while boosting the midpoint of its projected adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) loss to $400 million from $525 million. The company said it’s targeting EBITDA profitability in 2024.

That objective will be helped by efforts to trim marketing and promotional costs, which “will go a long way toward narrowing the goalposts around the range-of-outcomes debate,” added Santarelli.

The analyst also highlighted several potential catalysts for DraftKings stock, including internet casino and sports betting market share gains. Those factors are enhanced by some rivals dialing back spending, and DraftKings’ internal focus on sharpening customer acquisition and retention programs.

Promotional Spending Trending Lower

After profligate spending in 2020 and 2021 in the name of attracting clients, it appears online sportsbook operators, including DraftKings, are eschewing that approach and turning their focus to running profitable businesses.

While promotional extraction is an undoubted positive, now that the market better understands the frivolous nature of gross gaming revenue (GGR) and total addressable market (TAM) derived from GGR, there are implications from the changing behavior. For example, we believe the extraction of promotions is one of the main drivers of the slowing handle growth,” wrote Santarelli.

He’s just one analyst, but those comments are noteworthy because he’s long been a critic of handle and TAM being metrics for evaluating sports betting equities.

Santarelli added that while there will likely be bumps on DraftKings’ road to expanded market share and profitability, boosting hold while not shedding share is possible because it’s something rival FanDuel, the largest online sportsbook operator in the US, is proving adept at.


Source link

More articles

- Advertisement -spot_img

Latest article

rtp slot pragmatic gampang jackpot sensasionalslot megawin starlight princess 1000 penuh berkahcara jitu main slot win streakslot gacor terpercaya di indonesiapola gacor free scatter slot mahjongteknik terbaru slot olympuspola gacor 20 20 70 auto cetar mahjong waysslot gacor anti rungkad slot deposit dana otomatisslot mania olympus janji gacor langsung cair hadiah maksimaltutorial bermain slot mahjong ways 2 auto kemenangan besar hari inirekomendasi slot olympus 1000 jaminan maxwin terbesarsitus slot gacor gama69slot wild west gold telah kembali gacor dengan menang 50 jutaslot hoki lucky neko buatan provider pg soft sangat cocok untuk member baruslot ampuh gampang cuan besarcara jackpot besar main slot onlinebocoran permain mudah jp pragmaticperkalian beruntun terbaik wild banditoakun pro jepang untuk permainan slot yang lebih gacortips pendapatan lebih dengan cara all in untuk semesta pada slot mahjong waysslot maxwin paling di cari banyak memberslot terpercaya deposit dana terbarurekomendasi racikan pola terbaru gatotkacacara ampuh menang bermain di slot gacorcara cepat cuan besar main slot onlineteknik jitu scatter hitam mahjong ways 2 auto jackpot 200 jutateknik pola starlight princess banyak cuanscatter hitam dengan perkalian x1000 dijamin gampang menangpola jitu main slot online terbarupola ajaib naga hitam mahjong ways hasilkan slot scatter hitam viraltrik slot mahjong wins dengan pola terbarumenang lagi slot starlight princess x1000 jam 3 pagislot hacksaw paling dicari member karena mudah jackpotevent scatter hitam mahjong ways dapatkab hadiah jackpot ratusan jutabocoran scatter hitam mahjong ways2momen turunnya scatter hitam x1000 pada slot super mahjong ways 2slot pragmatic play paling gacorsistem jitu slot mahjong ways berhasil berikan kemudahan banjir scatter hitam populertips admin jarwo menang besar slot mahjong ways2tips cara paling wajar untuk menang slot gates of olympuscara slot pg soft banjir wild lebih mudah jackpot maxwin lancar tiap haripola gacor mahjong ways auto cuan besar tanpa ribetrekomendasi slot gacor terbaik mahjong ways langsung daftar sekarang pasti menang besarcara bermain slot mahjong ways 2 jurus ampuh maxwin anti rungkat khusus pemulamemang situs slot mahjong gampang jackpot nomer 1 indonesiaslot online mahjong ways gacor tiada henti gampang menang jp maxwinteknik keramat scatter hitam datangkan jackpot besar dengan cepathanya perlu 2 slot scatter hitam akan merubah nasib jadi sultan kaya barusistem curang bermain slot online olympus jackpot besarteknik jitu slot starlight princess bigwin terbesar sepanjang sejarahslot gacor terbaik dari pg softmudah jackpot dengan trik terbaru dalam bermain slot onlinepola terbaru olympus x1000strategi panas paling jitu 5 lions megawaysslot pragmatic terpanas gampang menang anti kekalahan mei 2024rahasia adik wahyu menang besar di slot dewa mahjong waysslot server kamboja tempat main slot online mahjong wayscara terbaik menang 100juta bermain dislot mahjong ways2slot mochimon menang sensasionalslot sweet bonanza memberikan ledakan maxwin tanpa ampuncara jitu mengandakan kemenangan dalam bermain slot onlinegokil main slot online dapet mobil lexusslot maxwin akun pro sweet bonanzascatter hitam populer mahjong ways2slot mahjong ways scatter hitam rekomendasi coach yebjudi slot gacor mahjong ways dari pgsoftbet receh menang secukupnya pada permainan slot pragmatic gates of olympuspanduan lengkap untuk pencinta slot super mahjong waysmesin slot hoki kakek zeus x500slot mania cuan maksimal dengan teknik kuno terbarucara jackpot slot online pragmatic playcara main slot raih untung kemenangan 100 juta per hari dengan trik iniperkalian unlimited slot starlight princesfenomena maxwin penuh perkalian pragmatic playsuper gacor hanya di permainan slot super mahjong ways 2jarang rungkad permainan slot starlight princess x1000 tergacor inislot terbaru olympus vip kemenangan terbesarsitus gacor anti rungkad cocok untuk permainan slot olympus terbaru