TD Cowen analyst Lance Vitanza has revised the target price for DraftKings (DKNG, Financial), reducing it from $60 to $55, while maintaining a Buy recommendation. This adjustment reflects a cautious stance as the company faces several challenges.
Despite the bearish sentiment ahead of the first quarter, Vitanza suggests that potential risks could actually benefit the stock in the long run. However, he notes that DraftKings may experience minimal movement in the short term due to various hurdles, including subdued seasonal trends, overall economic instability, and ongoing legislative challenges.
Wall Street Analysts Forecast
Based on the one-year price targets offered by 33 analysts, the average target price for DraftKings Inc (DKNG, Financial) is $54.95 with a high estimate of $75.00 and a low estimate of $35.00. The average target implies an upside of 61.46% from the current price of $34.03. More detailed estimate data can be found on the DraftKings Inc (DKNG) Forecast page.
Based on the consensus recommendation from 34 brokerage firms, DraftKings Inc's (DKNG, Financial) average brokerage recommendation is currently 1.9, indicating "Outperform" status. The rating scale ranges from 1 to 5, where 1 signifies Strong Buy, and 5 denotes Sell.
Based on GuruFocus estimates, the estimated GF Value for DraftKings Inc (DKNG, Financial) in one year is $60.24, suggesting a upside of 77.02% from the current price of $34.03. GF Value is GuruFocus' estimate of the fair value that the stock should be traded at. It is calculated based on the historical multiples the stock has traded at previously, as well as past business growth and the future estimates of the business' performance. More detailed data can be found on the DraftKings Inc (DKNG) Summary page.
DKNG Key Business Developments
Release Date: February 14, 2025
- Revenue: $4.8 billion for fiscal year 2024, a 30% increase year-over-year.
- Adjusted EBITDA: Improved by $332 million year-over-year to $181 million in 2024.
- Free Cash Flow: Positive for the first time in company history.
- Customer Base: Increased 42% year-over-year to 10.1 million.
- Fourth Quarter Revenue: $1.393 billion, representing 13% year-over-year growth.
- Fourth Quarter Adjusted EBITDA: $89 million.
- Structural Sportsbook Hold Percentage: Increased 80 basis points year-over-year to 11.2% for the fourth quarter.
- Adjusted Gross Margin: 45% for the fourth quarter.
- Fiscal Year 2025 Revenue Guidance: Raised to $6.3 billion to $6.6 billion, representing 32% to 38% year-over-year growth.
- Fiscal Year 2025 Adjusted EBITDA Guidance: Reaffirmed at $900 million to $1 billion.
- Fiscal Year 2025 Adjusted Gross Margin Guidance: Expected to be in the range of 46% to 47%.
- Fiscal Year 2025 Free Cash Flow Guidance: Approximately $850 million.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- DraftKings Inc (DKNG, Financial) reported a 30% year-over-year revenue increase to $4.8 billion for 2024.
- The company achieved positive free cash flow for the first time in its history.
- DraftKings Inc (DKNG) acquired 3.5 million new customers at record low acquisition costs, increasing its total customer base by 42% year-over-year to 10.1 million.
- Adjusted EBITDA improved by $332 million year-over-year to $181 million.
- DraftKings Inc (DKNG) is optimistic about future growth due to increasing structural sportsbook hold percentages and potential online gaming legalization in the US.
Negative Points
- There was a slowdown in handle growth across the industry in the fourth quarter of 2024.
- DraftKings Inc (DKNG) faces challenges in promotional intensity, which may impact net revenue margins.
- The company is cautious about raising guidance too early in the year despite strong early 2025 performance.
- DraftKings Inc (DKNG) is navigating regulatory challenges and uncertainties in new market expansions and tax implications.
- The company is still working on improving its live betting product and integrating acquisitions to enhance its offerings.
