DraftKings stocks (NASDAQ: DKNG) have experienced a remarkable rally, following an extended slump since July. This formative recovery has ensnared the attention of financial experts, with bullish indications notably mentioned by our friends at JPMorgan.
Joseph Greff, a distinguished analyst, illuminated the situation in his exchange with clientele today. He elevated DraftKings’ rating from “neutral” to “overweight”, ratcheting his price estimate of their shares upwards to $37, a significant hop from his past expectation of $26. This adjusted prediction signifies a 35% surge from the closing price of September 25 and enters the fray as the stock remains 19.31% short from its peak over the past 52 weeks, clocked on August 4.
As Greff noted, the advantageous qualities of the sports gambling sector – including consistent growth patterns and a sustainable control over operating expenses – make DraftKings an attractive investment, particularly amidst their faltering share value since late July.
Greff bases his lofty $37 end-goal on multiplying the operator’s projected 2026 EBITDA ($1.2 billion) by 15, and adding their expected year-end cash value ($3 billion). The present short interest for the stock stands at 5.4%, heightening the possibility that a new rally could induce bearish investors to liquidate their losing bets.
Still, even amid the recent setback, the stocks of DraftKings have proven victorious within the gaming industry for 2023, with a thunderous increase of 144.29% since the year’s dawn.
Compelling catalysts for future growth appear to be locked into place. With their attention geared toward efficient expense management, DraftKings can look forward to sustained growth, independent of new market acquisition. On top of that, a consolidating cost environment is advantageous for DraftKing’s stabilization efforts.
Strengthening their brand loyalty through better recognition and trust, coupled with innovative product enhancements, sets the stage for a successful share rebound, indicated Greff. Expenses toward customer acquisition are declining as DraftKings achieves national scale, and as sales and marketing costs fall dramatically, EBITDA margins are expanding rapidly.
In terms of America’s corporate space, the term “wide moat” is often used to highlight a company’s unique advantages in thwarting competition and maintaining customer loyalty. The sports wagering industry, marked by relatively low entry barriers and a vast network of competitors, is predominantly controlled by a duopoly of FanDuel and DraftKings.
“Despite dozens of competitors,” Greff pointed out, “DraftKings has constructed an impressive moat, fending off formidable rivals such as Caesars Sportsbook.” Remaining stalwart becomes even more crucial in light of fresh challenges posed by Fanatics and Penn Entertainment (NASDAQ: PENN) in alliance with ESPN Bet who are eager to wrestle away their commanding hold.
For those readers captivated by this larger tale of gaming and wagering, our West Island Blog features in-depth content on that very subject. We encourage you to read up about the best online casinos this month for Canadian players – an often overlooked but equally exhilarating facet of the gaming world. Experience the thrill akin to the adrenaline rush of betting on hot stocks like DraftKings, but from the comfort of your home.
