DraftKings Sports-Gambling Provider Initiated Positive at Susquehanna

DraftKings, which went public last month, was initiated positive at Susquehanna with a $33 share-price target.
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DraftKings  (DKNG) - Get Report shares rose after the Boston sports-gambling company, which went public last month, was initiated positive at Susquehanna Financial.

The investment firm put a price target of $33 on the stock. At last check DraftKings shares stood at $26.56, up 2.7%. They have jumped by a third since the company went public April 24. 

DraftKings has now garnered four buy ratings, zero holds and zero sells, according to Bloomberg.

The company went public in a reverse merger with blank-check company Diamond Eagle, and Diamond Eagle’s stock became DraftKings stock. 

DraftKings sponsors daily fantasy-sports contests.

Last month, Morgan Stanley initiated coverage with an overweight rating and a $23 price target.

Morgan Stanley analyst Thomas Allen wrote in a report that the company was “almost a pure play” on the early innings of legalized sports gambling in the U.S.

While the coronavirus pandemic is crimping sports wagers now, with sports competition on hiatus and casinos closed, he expects states’ deteriorating budget conditions will lead to a push for gambling.

Tax revenue for states will slump big time amid the economic weakness stemming from the pandemic, and state governments may find sports betting and online gambling to "be the answer" to replace lost revenue.

With states continuing to legalize sports gambling - only 17 have fully legalized it so far, according to ESPN - industry revenue could explode by a factor of eight, to $12 billion in 2025, Allen said. 

The Supreme Court allowed states to legalize sports gambling in 2018.

DraftKings is scheduled to issue its first earnings report Friday. Analysts surveyed by FactSet are forecasting a loss of 15 cents a share on revenue of $104.4 million.