Market Overview

Analyst Likes DraftKings As Public Embraces Legal Sports Betting

Analyst Likes DraftKings As Public Embraces Legal Sports Betting

The case for investing in providers of legalized gambling like DraftKings in the U.S. is based in part on encouraging trends elsewhere in the world, according to Canaccord Genuity.

DraftKings and SBTech were acquired by Diamond Eagle Acquisition Corporation (NASDAQ: DKNG), which merged into a new DraftKings entity.

The DraftKings Analyst

Michael Graham initiated coverage on the stock with a Buy rating and $25 price target.

The DraftKings Thesis

Graham said investors should look towards the United Kingdom to better understand the growth potential DraftKing faces in the U.S. as the public starts to "embrace" legalized sports betting. Most notably, online sports betting is around 2.5 times larger than in-person sports betting while activity per player is nearly five times larger.

So far, eight states have legalized sports betting in the U.S. which covers 13.6% of the U.S. population and this figure should rise to around 65% by 2026.

Graham said DraftKing's $3.3 billion reverse mergers with the blank-check company Diamond Eagle Acquisition created a well-funded public entity with more than $500 million in cash. In fact, the new company "bears the hallmarks" of an Internet disruptor as it targets a large online market where it benefits from positive network effects and minimal competitors.

The company also boasts around 650,000 paying players in its Daily Fantasy Sports business across 43 states and this represents a "fertile" cross-selling opportunity as legalization expands across the U.S., the analyst wrote.

Coupled with a national advertising campaign, the company should be able to grow revenue at a 26% compounded annual growth rate through 2026.

DKNG Price Action

Shares were trading higher by 1.8% at $21.38.

Related Links:

Morgan Stanley Wants To Bet On DraftKing's Stock

DraftKings, NFL Execs Talk Sports Betting, Increased Engagement At Forbes Summit

Photo credit: Baishampayan Ghose, Flickr

Latest Ratings for DKNG

Jul 2020BenchmarkInitiates Coverage OnBuy
Jul 2020Stephens & Co.Initiates Coverage OnOverweight
Jun 2020RosenblattInitiates Coverage OnBuy

View More Analyst Ratings for DKNG
View the Latest Analyst Ratings


Related Articles (DKNG)

View Comments and Join the Discussion!

Posted-In: DraftKings Michael GrahamAnalyst Color Price Target Initiation Sports Analyst Ratings General Best of Benzinga

Latest Ratings

KEXB of A SecuritiesMaintains49.0
WYB of A SecuritiesMaintains30.0
FLOWB of A SecuritiesMaintains33.0
PEGB of A SecuritiesMaintains60.0
MRVLB of A SecuritiesMaintains50.0
View the Latest Analytics Ratings
Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Premarket Activity
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Fintech Focus
A daily collection of all things fintech, interesting developments and market updates.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at