Analysts are reacting to the third quarter earnings report from DraftKings and speculating on what could be next for the online sports betting company.
The DraftKings Analysts: Stifel analyst Jeffrey A. Stantial has a Hold rating and raises the price target from $33 to $36.
Truist analyst Barry Jonas has a Buy rating and raises the price target from $44 to $45.
Needham analyst Bernie McTernan has a Buy rating and raises the price target from $44 to $50.
Related Link: Exclusive: DraftKings CEO Highlights Sustainable Model For Company
Stifel on DraftKings: The sports betting company is crowned the king of the online sports betting and iGaming sectors by Stifel analyst Jeffrey A. Stantial.
The analyst said results from DraftKings in the third quarter "far exceeded" expectations.
"With our Hold-thesis proven entirely wrong, and the stock up +196% YTD, the question becomes where do we go from here?" Stantial asked.
The analyst said DraftKings could raise long-term market share and EBITDA targets at its investor day on Nov. 14, but had some questions.
"On the other hand, we still believe it may be early to write off risk of market share deconsolidation (more so for iCasino) and valuation appears increasingly stretched. Hence, we reiterate Hold rating, and continue to wait for a pullback to get more constructive."
The analyst said DraftKings is showing strong execution on product, which is helping with upside to guidance.
Competition remains a key catalyst in the sports betting space, with Stantial saying there is room for a third and maybe a fourth player in the U.S. online sports betting market.
Truist on DraftKings: The sports betting company had a "robust" third quarter beat and raise, according to analyst Barry Jonas.
"We increase estimates for the new 2023/2024 guide in the upper range," Jonas said.
The analyst said that some customers or new players could try out ESPN Bet, which is being launched by PENN Entertainment PENN this month, but will likely return to DraftKings after trying out the competition.
Jonas expects DraftKings to provide new mid-term and long-term targets at its investor day on Nov. 14.
"DKNG continues to launch states effectively, most recently having already acquired 5% + of the adult population in KY."
Needham on DraftKings: The price target on DraftKings is raised, but a potential revenue slowdown is on the mind of Needham analyst Bernie McTernan.
"The outperformance is driven by items like handle share, OSB hold and lower promotions, given the momentum in the business and financial discipline over the past year, we suspect this will end up being a conservative start to '24E guidance," McTernan said.
The analyst said DraftKings 2024 revenue growth might be only slightly above the rest of the sports betting market, but has upside due to its product and technology.
"Ultimately, if DKNG can continue to push product and technology innovation we suspect this 500bps of outperformance could be conservative."
DKNG Price Action: DraftKings shares were up 1.5% to $34.26 at the time of publication Monday, adding to the 16% increase on Friday. Shares of DraftKings are up over 200% year-to-date and have traded between $10.69 and $34.49 over the last year.
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