- Wednesday, October 16, 2024
Shares of DraftKings Inc. (DKNG) saw a nearly 7% rise in Wednesday morning trading following an upgrade from BofA Global Research analyst Shaun Kelley. In his upgrade, Kelley spoke of the company's "accelerating product and revenue momentum" that is poised to drive an inflection in margins and profitability.
Kelley identified a key turning point, stating that the rate of growth in the cost of revenue and external marketing has peaked. This cost inflection allows DraftKings to leverage its expenses as promotions ease in more mature markets and the company reduces spending on external marketing. These improvements are expected to result in better efficiencies and lower customer-acquisition costs.
Although the stock has already surged 171% this year, Kelley believes that DraftKings can achieve even more through market-share gains. As a result, he has raised his price objective from $25 to $35.
On Tuesday, shares in DraftKings closed at $28.96 and were trading at $30.94 early in Wednesday's session.
Summary:
- DraftKings stock rises nearly 7% after an upgrade from BofA Global Research analyst Shaun Kelley.
- Kelley highlights the company's accelerating product and revenue momentum, signaling an impending shift in margins and profitability.
- DraftKings has reached a cost inflection point, allowing for greater cost leverage.
- Further market-share gains are anticipated, potentially propelling the stock price even higher.
- Price objective raised from $25 to $35.
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