- Wednesday, October 16, 2024
DraftKings Inc. shares are experiencing a significant surge of over 5% in Tuesday trading, following a bullish assessment from an analyst. MoffettNathanson analyst Robert Fishman has increased his rating on the stock DKNG to "buy" from "neutral" in his recent communication to clients. Fishman's conviction in the company's story has grown stronger, stating that DraftKings is on the verge of a substantial upturn in profitability.
Closing the market share gap with U.S. online sports betting leader FanDuel through product enhancements, improved hold rates, and attracting VIPs, DraftKings has made significant progress in recent quarters. Moreover, the company has surpassed BetMGM as the top player in U.S. iGaming during the second quarter. This momentum is expected to continue, driving robust top-line growth while maintaining a strategic focus on expense management.
Despite missing out on a recent substantial rally where shares have surged by more than 160% year-to-date, Fishman believes there is still more upside potential. His revised price target of $37 (previously $31) suggests a possible increase of approximately 24% from current levels. This target implies a 31% jump from Monday's closing price before the upgrade.
Fishman applauds DraftKings for its successful efforts in expanding its market share through product enhancements for parlay offerings. These options not only attract incremental wagers but also increase overall hold rates for the sportsbook as parlays become a more significant part of the betting mix.
Additionally, Fishman notes that DraftKings now holds greater appeal for "VIP" bettors or "whales" due to more favorable betting lines. Since a large portion of sportsbook revenues depend on these VIPs, maintaining their engagement will drive further performance in the months ahead.
With these positive developments, DraftKings Inc. is poised for continued success in the online sports-betting market.
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