On Tuesday, Piper Sandler maintained its Overweight rating on DraftKings Inc. (NASDAQ:DKNG) with a steady price target of $50.00. The firm's stance comes in anticipation of the company's second-quarter earnings call, taking into account recent developments such as the completion of the Jackpocket acquisition and the implications of tax law changes in Illinois.
The revised estimates by Piper Sandler place DraftKings' adjusted EBITDA for 2024 at the lower end of the company's own guidance range. The firm anticipates that investors will focus on the updated 2024 guidance and any insights provided regarding the 2025 EBITDA during the upcoming earnings call.
DraftKings is expected to continue its operations as normal in the latter half of the year. Piper Sandler predicts that the company will likely counterbalance the majority of the tax-related challenges by next year. The firm also highlights that along with profitability, investors will be keen to learn about DraftKings' plans for capital allocation, including the potential of a share repurchase program being announced.
The firm notes that the sentiment around DraftKings may be more varied than in previous quarters as the market awaits the second-quarter results. Despite this, Piper Sandler reaffirms its positive Overweight rating on the stock.
In other recent news, DraftKings Inc. has been the subject of several recent developments. The company has announced the appointment of Erik Bradbury as its new Chief Accounting Officer. Bradbury's return is marked by a significant restricted stock unit award and a performance-based stock unit award tied to the company's performance in 2025 and 2027.
DraftKings has also been the focus of several adjustments in stock targets by various analyst firms. Stifel maintained a Buy rating on DraftKings with a steady price target of $50.00, despite a 15% decline in the company's shares over the trailing two-month period. Oppenheimer, on the other hand, lowered its price target from $60 to $58, maintaining an Outperform rating.
Guggenheim adjusted its price target for DraftKings to $52.00 from $53.00, while maintaining a Buy rating. Deutsche Bank reiterated a Hold rating on DraftKings shares with a target of $35, citing regulatory risks and a potential shortfall in 2Q24 earnings. Lastly, BMO Capital maintained an Outperform rating and a stock price target of $54.00 for DraftKings, showing confidence in the company's long-term prospects despite potential challenges from new tax legislation in Illinois.
These are recent developments for DraftKings.
InvestingPro Insights
As DraftKings Inc. (NASDAQ:DKNG) navigates a landscape punctuated by acquisitions and regulatory shifts, investors are keenly awaiting the company's second-quarter performance. InvestingPro data indicates a robust revenue growth of 57% over the last twelve months as of Q1 2024, signaling a strong upward trajectory in sales. This aligns with the InvestingPro Tip that analysts anticipate sales growth in the current year, reinforcing the positive outlook echoed by Piper Sandler.
With a market capitalization of $19.13 billion, DraftKings is positioned as a significant player in the online betting and gaming industry. Despite not being profitable over the last twelve months, analysts are optimistic about the company's future, as another InvestingPro Tip suggests that net income is expected to grow this year. This projection of profitability may be a critical factor for investors considering the company's long-term viability.
DraftKings' share price volatility is something investors should monitor, as highlighted by an InvestingPro Tip. The company's stock price movements have been quite volatile, which could offer opportunities for investors with a higher risk tolerance. On the flip side, this volatility necessitates a cautious approach for those seeking stability.
For readers looking to delve deeper into the financial nuances of DraftKings, InvestingPro offers additional insights. There are 11 more InvestingPro Tips available that could provide valuable context for investment decisions, particularly in light of the recent analyst ratings and the company's strategic moves. To access these tips and enjoy up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription, use the coupon code PRONEWS24.
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