Key Highlights:
- DraftKings (DKNG, Financial) is highlighted as a top pick by BMO Capital Markets, despite potential weak Q1 earnings.
- Analysts forecast significant EBITDA growth for DraftKings, with resilience noted by CFRA due to its lack of travel exposure.
- DraftKings faces challenges in sports betting with low hold rates, impacting betting limits, leading to a 7.8% YTD decline.
BMO Capital Markets' Insight on DraftKings
BMO Capital Markets has recently placed DraftKings Inc. (DKNG) in the spotlight, recognizing it as a top pick leading up to the Q1 earnings report. Despite the potential for less-than-stellar results, Analyst Brian Pitz points to DraftKings' attractive valuation. The company is at the forefront of its profitability journey, with impressive projected EBITDA growth rates estimated at 40% over the next three years and 30% over five. This growth potential, coupled with the recent CFRA upgrade to a Buy rating, underscores DraftKings’ resilience compared to traditional casinos that are burdened by travel constraints.
Challenges Amid Increased Sports Betting Interest
While sports betting interest surges, DraftKings is encountering hurdles with low hold rates, largely due to the presence of "sharp" bettors. These knowledgeable bettors influence betting limits, adding complexity to DraftKings’ operations. Consequently, the stock has seen a decline of 7.8% year-to-date.
Analysts' Projections and Recommendations
A closer look at the one-year price targets from 33 analysts reveals an average target price for DraftKings Inc (DKNG, Financial) at $54.95, with the potential to reach as high as $75.00 or as low as $35.00. This average target price indicates a promising upside of 60.05% from the current trading price of $34.33. For more comprehensive forecast data, visit the DraftKings Inc (DKNG) Forecast page.
The consensus among 34 brokerage firms positions DraftKings Inc's (DKNG, Financial) average brokerage recommendation at 1.9. This suggests an "Outperform" status on a scale where 1 reflects a Strong Buy, and 5 represents a Sell.
GF Value and Potential Upside
According to GuruFocus estimates, DraftKings Inc (DKNG, Financial) holds a projected GF Value of $60.21 for the upcoming year. This estimation indicates a substantial upside of 75.39% from the current price of $34.33. The GF Value represents GuruFocus' calculated fair value for the stock, derived from historical trading multiples and business growth metrics. To explore more detailed data, refer to the DraftKings Inc (DKNG) Summary page.
