DraftKings Inc.’s strong second-quarter performance leaves the sports-betting platform well-positioned for more growth, say analysts.
Shares of DraftKings
DKNG,
climbed 7.7% Friday, boosted by the company’s surprise second-quarter profit and more upbeat full-year sales forecast.
The company hit it “out of the park,” according to Benchmark analyst Mike Hickey. “DraftKings hits a grand slam with their Q2 2023 performance, firmly cementing their place as a front-runner in the digital sports entertainment and gaming industry,” he wrote in a note released Friday. “In light of this robust performance and optimistic future forecast, we believe DKNG is primed for ongoing growth.”
Related: DraftKings stock rallies on surprise profit, more upbeat full-year sales forecast, as new sports-betting customers roll in
Hickey highlighted DraftKings’ massive 88% year-over-year revenue growth, which delivered revenue of just under $875 million, easily surpassing Wall Street’s forecast of $765 million. “This impressive performance was largely attributed to the superior product and customer experience that led to higher retention and engagement, particularly with the MLB, and a boost in new customers (+39% YoY),” he wrote. Set against this backdrop, Benchmark raised its DraftKings price target to $37 from $32 and reiterated its buy rating for the sports-betting company.
In a note released late Thursday Stifel analyst Jeffrey Stantial said that DraftKings’ “hot streak” is continuing, likely driving the company’s shares higher Friday. However, Stifel kept its hold rating for Draft Kings. “While recent product-driven upside drivers appear likely to continue into 2H23 given product enhancements planned for NFL season & the ongoing Golden Nugget platform migration, we continue with our Hold rating for now, reflecting a more cautious view on valuation & potential long-term market share deconsolidation,” Stantial wrote in the note.
CFRA raised its DraftKings price target to $35 from $28 Friday. “DKNG expects to launch its sportsbook in Kentucky this fall,” wrote CFRA equity analyst Zachary Warring, in a note. “The company continues to be a leader in mobile gaming and is executing well to achieve profitability.”
Related: DraftKings is powering toward a big milestone — but a budding threat looms
However, CFRA maintained its hold rating for DraftKings. “We believe shares are fairly valued and see little to drive shares higher in the near term,” wrote Warring.
Of 33 analysts surveyed by FactSet, 19 set a buy rating, 12 set a hold rating and two set a sell rating for DraftKings.
DraftKings’ stock has risen 184.2% in 2023, outpacing the S&P 500 index’s
SPX
gain of 17.6%.
Bill Peters contributed to this article.
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