The firm's bullish stance on the company is based on trends in countries where growth in online gambling has "far [outstripped] in-person wagering."
In the U.K., for example, the online sports betting market is 2.5 times larger than the in-person market, with betting activity per player nearly five times more frequent online.
The U.S. is still in the beginning stages of legalizing online gambling, according to Canaccord analyst Michael Graham. New Jersey became the first state to legalize online sports betting, in 2018.
Since then, eight states have legalized online sports betting and 13.6% of the U.S. population has access to it in some form.
"Americans like gambling, but we are generally reluctant to break the law," Graham wrote.
"A more accommodating regulatory environment and ongoing high levels of consumer engagement with both sports and mobile devices create a fertile backdrop for growth in the nascent U.S. online gambling market,"
Casinos currently account for 94% of the U.S. gambling market, with sports betting making up a small fraction of that $75 billion total, according to Equibase.
If legalization in the U.S. continues, Canaccord estimates, the legal online sports and gaming betting market could increase from $430 million in 2018 to $26 billion over time.
DraftKings began trading on April 24. DrafKings shares at last check rose 3.8% to $21.79.