Sports betting and iGaming company DraftKings Inc DKNG was sized up by an analyst with a recent note that came after DraftKings reported fourth-quarter financial results and raised 2024 guidance.
The DraftKings Analyst: Morgan Stanley analyst Stephen Grambling had an Overweight rating and raised the price target from $40 to $49.
The Analyst Takeaways: Capital allocation and strong EBITDA from DraftKings lead to an increased price target from Grambling.
"We are raising estimates to reflect DKNG's 4Q results, updating our 2024-2026 industry estimates for better market trends along with DKNG's acquisition of Jackpocket," Grambling said.
The analyst said guidance from the company and the acquisition of Jackpocket, an app for ordering lottery tickets, were key factors in raising estimates for the company.
"DKNG's continued operational execution, inflection to positive FCF/EPS and optimization of the balance sheet should continue to drive the stock higher."
Grambling called the deal to acquire Jackpocket as a "nice tuck-in acquisition." The analyst said the acquisition could help with customer acquisition and additional state launches.
The key focus for the analyst going forward is capital allocation as DraftKings moves to generating free cash flow.
"We see significant optionality from deploying that cash and optimizing the balance sheet. The company could look to do more modest M&A over time to add customer acquisition tools, reinvest in new product or buy back stock."
The analyst estimated DraftKings would have $1.2 billion in cash on its balance sheet at the end of fiscal 2024, the Jackpocket deal closes and around zero debt.
DKNG Price Action: DraftKings shares trade at $42.33 on Wednesday at market close versus a 52-week trading range of $17.02 to $45.62. Shares of DraftKings are up over 120% in the last year.
Photo: Shutterstock
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
date | ticker | name | Price Target | Upside/Downside | Recommendation | Firm |
|---|
Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.
