Shares of DraftKings (NASDAQ: DKNG) popped 14.2% this week, according to data provided by S&P Global Market Intelligence, as multiple analysts weighed in with positive notes following the online betting platform's launch in Vermont last week. The launch marked the 26th U.S. state in which DraftKings operates, in addition to Ontario, Canada.
Why these analysts think DraftKings will outperform
In a note to clients Thursday, Stifel analyst Jeffrey Stantial upgraded shares of DraftKings to buy from hold, raising his firm's per-share price target on the stock to $45 from $40. The stock closed Friday's regular session at $37.62.
Stantial acknowledged increasing competition from sports betting app FanDuel, a subsidiary of international gambling company Flutter Entertainment, and Disney's recently launched ESPN Bet app. But he also argued that DraftKings' "near-term headwinds are fading, [...] enabling investor focus to shift back to the fundamental outlook where healthy same-state handle growth, structural hold-rate expansion, marketing/promo discipline, and fixed cost efficiencies pose upside" to the company's EBITDA guidance.
Also on Thursday, UBS analyst Robin Farley reiterated her buy rating on DraftKings, assigning a $44 price target. Farley wrote that DraftKings should be able to sustain a high share of the online sports betting (OSB) market despite the growing threat of competitive platforms.
What's next for DraftKings shareholders?
DraftKings' current 2024 guidance calls for revenue of $4.5 billion to $4.8 billion (up 25% year over year at the midpoint) and adjusted EBITDA of $350 million to $450 million (swinging from an estimated adjusted EBITDA loss of between $95 million and $115 million in 2023).
Assuming the timing of DraftKings' past reports remains consistent, DraftKings should be slated to release fourth-quarter 2023 results and update its 2024 outlook in mid-February. But given these multiple votes of confidence from Wall Street in the meantime, it's no surprise to see the stock rallying now.
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Steve Symington has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Walt Disney. The Motley Fool recommends Flutter Entertainment Plc. The Motley Fool has a disclosure policy.