DraftKings’ Strategic Positioning and Growth Potential Earns Buy Rating from Analyst

In a report released today, Shaun Kelley from Bank of America Securities reiterated a Buy rating on DraftKings (DKNG – Research Report), with a price target of $50.00.

Shaun Kelley has given his Buy rating due to a combination of factors that highlight DraftKings’ strategic positioning and potential for growth. One of the key considerations is the company’s proactive approach to regulatory changes, such as the implementation of a $0.50 fee on wagers in Illinois, which aligns with industry trends and is expected to have a minimal impact on revenue. Additionally, DraftKings remains optimistic about future iGaming legislation, which could open new revenue streams in the coming years.
Moreover, despite concerns about slowing handle growth, DraftKings management emphasizes that handle is not the most reliable metric due to the volatility of sports events and evolving customer behaviors. The company is focused on improving net win margins and exploring opportunities in prediction markets, which could be pivotal in markets with high barriers or tax rates. Furthermore, DraftKings is confident in maintaining its structural hold levels, despite potential short-term volatility, supported by their robust odds-making processes. These factors contribute to the positive outlook and the Buy rating assigned by Shaun Kelley.

In another report released yesterday, Citi also maintained a Buy rating on the stock with a $55.00 price target.