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DraftKings Climbs on Valuation, Gambling-Legalization Prospects

DraftKings was upgraded to outperform with a $70 target at Cowen, which cited valuation and prospects for wider sports-gambling adoption.
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DraftKings  (DKNG) - Get DraftKings Inc. Report shares on Monday got another boost from the analyst community after Cowen upgraded the stock to outperform from market perform with a $70 price target. 

The firm made the upgrade due to the company's valuation and the prospect of more states legalizing sports gambling. 

At last check DraftKings shares were trading 1.7% higher at $57.60.

The pace of state legalization is "the primary top-line catalyst and share-price driver for DraftKings," according to analyst Stephen Glagola.

By the end of 2022 the Boston sports-gambling company could be live in states that represent half the U.S. population, the analyst said.

In New York, where sports gambling was recently legalized, the analyst sees DraftKings as having a "high probability of achieving market access," by the first quarter of next year, Glagola wrote.. 

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That would come as the state adopts a "potentially high tax model" that will drive higher barriers to entry for DraftKings' potential rivals, he said. 

Last week, DraftKings was initiated buy with a $75 price target at Guggenheim. 

DraftKings was "well positioned" to take significant market share in North American markets, according to Guggenheim analyst Curry Baker.

"Beyond the momentum towards legalization and the inherent tailwinds new states/markets offer, we see several other competitive advantages underpinning our positive outlook for DraftKings," Baker said.

Last week, DraftKings agreed to pay at least $50 million over three years to distribute a sports and pop culture podcast from former ESPN  (DIS) - Get The Walt Disney Company Report host Dan Le Batard.

The Boston company will make money on the deal by selling advertising, as well as sub-licensing the podcast to radio stations and other audio providers, The Wall Street Journal reported.