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DraftKings Jumps as Analysts Raise Price Targets After Sales Beat

DraftKings analysts raised price targets and revenue estimates after the sports-gambling company reported stronger-than-expected revenue.
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Shares of DraftKings  (DKNG)  jumped Monday as analysts raised price targets and revenue estimates after the sports-betting platform on Friday reported fourth-quarter results. 

The company reported fourth-quarter revenue doubled. And it raised its revenue estimates for 2021 to between $900 million and $1 billion, up from its previous view between $750 million and $850 million.

Analysts at Loop Capital reiterated their buy rating on the Boston company while raising their price target to $105 a share from $100. Loop Capital raised its revenue guidance to $1.11 billion. 

"The bears have long argued that online gaming and sports betting was essentially a 'race to zero,' implying that operators like DKNG need to spend aggressively on promos to attract users and generate revenue," said Loop analyst Daniel Adam.

"We completely disagree with the bear argument. In our view, the fact that DKNG was profitable in [New Jersey] last year, particularly given the impact of COVID in first-half 2020 as there were no traditional sports for a few months in [the first and second quarters] completely undermines the bear thesis."

DraftKings Scores Fourth-Quarter Sales Beat, Lifts 2021 Outlook

Goldman Sachs analyst Stephen Grambling maintained his buy rating while raising his price target to $73 a share from $71. 

He also raised his  revenue expectation to $1.01 billion in 2021 from his previous view of $885 million. Revenue for 2022 is now expected to be $1.4 billion, up from $1.16 billion. 

"Management highlighted stronger handle in iGaming and sports betting during the Super Bowl in [Michigan/Virginia] than in existing states during their go live years, the addition of apps to Google Play  (GOOGL)  (Android users represent about 40% of smartphone users per StatCounter), and 50% cross-sell into iGaming (vs. previously about 30%) all driving this momentum, which we anticipate will be supplemented by a normalizing sports calendar," Grambling said.

DraftKings shares at last check were up 10% to $67.83.