A new DraftKings analyst is bullish on the potential for a larger legal sports betting market in the U.S.
The DraftKings Analyst: Benjamin Chaiken initiated coverage of DraftKings Inc DKNG with an Outperform rating and $76 price target.
The DraftKings Takeaways: The growth story associated with DraftKings is "still in its infancy," Chaiken said in a Monday initiation note.
One of the key drivers for DraftKings is an anticipated acceleration of sports betting legalization following COVID-19, the analyst said.
States are looking to fill budget gaps, which Chaiken said will make it compelling for states to legalize sports betting.
“DraftKings has access to only 18% of the population with mobile betting and line of sight opportunity to a few other states.”
California represents 12% of the U.S. population, and along with Texas and Florida, could provide upside for DraftKings, the analyst said.
Credit Suisse's $100 "blue sky" price target for DraftKings accounts for California being added to the mix, he said.
DraftKings is undervalued versus peers and remains the only pure play mobile sports betting company in the U.S, Chaiken said.
“While there is concern over valuation by some in the investment community, we don’t think that it fully captures the accelerating growth pipeline available to DKNG or the earlier stage in its own lifecycle relative to peers.”
DKNG Price Action: DraftKings shares were up 7.19% Monday to $52.33.
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