DraftKings Inc. (NASDAQ: NASDAQ:DKNG) maintained its Buy rating and $60.00 price target from Needham.
The firm's assessment followed the performance of sportsbooks in the second week of NFL games, which showed a significant improvement from the first week.
The analysis suggested that sportsbooks experienced a bounce-back, with underdogs covering more than half of the games and the largest underdogs winning outright in a majority of the Sunday games.
The sports betting company's performance was compared to last year's data, indicating that the first week would have ranked as the fifth-worst week for hold rate in the previous season.
However, the second week's results were seen as positive for sportsbooks, as underdogs won outright in three of the four largest games during the Sunday 1pm and 4pm ET slate.
Additionally, it was noted that the rate at which the point total stayed under the betting line was greater than 50%, which is typically favorable for sportsbooks.
Needham also reported that there were no observed changes in new customer promotions, which could influence betting patterns and the appeal of sportsbooks to new users. The stability is seen as a positive sign for DraftKings' market position.
Moreover, the firm highlighted that DraftKings' iOS app store rankings in the sports category remained similar to the previous week, maintaining a lead over its competitor FanDuel. This consistency in app store rankings reflects a stable consumer preference and market presence.
The endorsement from Needham comes at a time when the sports betting industry is closely monitoring the performance of various sportsbooks during the NFL season, which is a significant period for betting activity.
In other recent news, Morgan Stanley has maintained an Overweight rating for the company, indicating a 30% upside, despite a less-than-stellar performance in the second quarter.
On the other hand, TD Cowen retained its Buy rating and $50.00 stock price target, following DraftKings' strategic acquisition of Simplebet.
The move is expected to enhance the company's in-game betting offerings, despite an initial negative impact on cash flow.
DraftKings also reported an impressive 80% surge in new online sports betting and iGaming customers year-over-year, with a 26% increase in revenue, reaching $1.104 billion.
The company also managed to reduce its marketing costs by over 40% and announced a share repurchase program of up to $1 billion.
Susquehanna maintained a Positive rating on DraftKings and raised its price target to $48, anticipating favorable performance from the company in the latter half of 2024. Similarly, Needham reiterated its Buy rating and a price target of $60.00, highlighting the onset of the NFL season as a pivotal period for sportsbook operators.
InvestingPro Insights
As DraftKings Inc. (NASDAQ:DKNG) continues to navigate the competitive sports betting landscape, recent data and insights from InvestingPro provide a deeper look into the company's financial health and market performance. With a robust market capitalization of $18.35 billion, DraftKings showcases significant industry presence. The company's revenue growth is particularly notable, with an impressive 43.26% increase over the last twelve months as of Q2 2024, reflecting its ability to expand in a burgeoning market. However, it's important to note that the company operates with a negative P/E ratio of -44.11, highlighting its current lack of profitability.
An InvestingPro Tip suggests that analysts expect net income growth this year, indicating a potential turnaround for the company's bottom line. Additionally, despite a high Price / Book multiple of 14.13, which may suggest a premium valuation, the same analysts predict that DraftKings will become profitable this year. This projection, if realized, could significantly impact investor sentiment and the stock's performance. For those interested in further details, InvestingPro offers more than 7 additional tips on DraftKings, which can be found at the dedicated InvestingPro product page.
Lastly, DraftKings' stock price movements have been volatile, as indicated by a 21.78% one-year price total return as of the same date. This volatility is something investors may want to consider when assessing the stock's fit within their portfolio. DraftKings does not pay a dividend, which could influence the investment strategy of income-focused shareholders. The insights provided here aim to equip investors with a more comprehensive understanding of DraftKings' financial standing and market potential as they make informed decisions.
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