Sports betting company DraftKings got price target hikes from analysts following Friday’s fourth quarter results.
The company’s fourth-quarter revenue doubled from the year-ago quarter. It boosted its revenue estimates for 2021 to between $900 million and $1 billion, up from its previous view between $750 million and $850 million.
Goldman Sachs analyst Stephen Grambling increased his price target to $73 a share from $71. "Management highlighted stronger handle in iGaming and sports betting during the Super Bowl in [Michigan/Virginia] than in existing states during their go live years, the addition of apps to Google Play (Android users represent about 40% of smartphone users per StatCounter), and 50% cross-sell into iGaming (vs. previously about 30%) all driving this momentum, which we anticipate will be supplemented by a normalizing sports calendar," Grambling said. The analyst raised his revenue expectation to $1.01 billion in 2021 from his previous view of $885 million.
Loop Capital maintained their buy rating, while raising their price target to $105 a share from $100. It boosted revenue guidance to $1.11 billion. Loop analyst Daniel Adam said, “The bears have long argued that online gaming and sports betting was essentially a 'race to zero,' implying that operators like DKNG need to spend aggressively on promos to attract users and generate revenue".
Adam added, "We completely disagree with the bear argument. In our view, the fact that DKNG was profitable in [New Jersey] last year, particularly given the impact of COVID in first-half 2020 as there were no traditional sports for a few months in [the first and second quarters] completely undermines the bear thesis."