DraftKings Stock Got a New Buy Rating. It Still Fell.
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DraftKings stock’s recent skid continued Friday even though the sports betting firm won over another analyst.
Guggenheim analyst Curry Baker launched coverage on DraftKings stock with Buy rating and $75 price target. The stock closed down 1.4% to $56.66. DraftKings shares have fallen about 24% from its March highs, which are just short of Baker’s fresh target.
He forecasts DraftKings can achieve long-term North American revenue ranging from $7.6 billion to $10.6 billion when the online sports betting and online casino games business reaches maturity. He defines maturity as when 75% of the U.S. population can legally bet on sports online, and when 30% can play online casino games, known as iGaming.
“The momentum towards legalization appears to be building in almost every state (all but three have legislation in the pipeline), and the proposition to states/lawmakers is fairly straightforward,” he wrote. Online sports betting and online casino games, “are popular products with consumers and serve as a new source of tax revenue for state budgets (especially as many state budgets have been hit hard by COVID).”
For DraftKings specifically, he points to the company’s competitive advantages driven by its strong brand, proprietary technology, leading market share positioning, and financial firepower to fund future growth.
Baker is far from the only analyst upbeat about DraftKings’ prospects. Of the 27 analysts covering DraftKings stock that are listed by FactSet, 18 have Buy or equivalent ratings. Only one has a Sell rating. The mean target price is $72.96.
Write to Connor Smith at connor.smith@barrons.com