DraftKings (NASDAQ:DKNG) inventory is getting a much-needed elevate after Morgan Stanley issued constructive feedback on the battered on-line sportsbook operator.
Morgan Stanley analyst Thomas Allen in a 2016 CNBC interview. The financial institution is bullish on DraftKings inventory. (Picture: CNBC)
DraftKings is greater by greater than 5% in noon buying and selling, although that’s barely sufficient to dent an virtually 76% decline over the previous yr. Hindered by lack of profitability and a market atmosphere that doesn’t take kindly to such shares, DraftKings hasn’t closed above its 200-day transferring common since final September.
Nonetheless, Morgan Stanley is optimistic concerning the gaming firm, citing the acquainted catalyst of complete addressable market progress.
We forecast authorized US sports activities betting & iGaming to extend from <$1.5 billion in 2019 to $21 billion in 2025 as extra states legalize and spend per capita rises,” stated Morgan Stanley fairness strategist Michelle Weaver in a report back to shoppers.
DraftKings inventory is considered one of 45 on the financial institution’s excessive conviction North American equities record.
Morgan Stanley, a DraftKings Supporter
Sheer worth motion confirms it’s been troublesome to be bullish on DraftKings in latest months. However Morgan Stanley is in that camp.
In March, analyst Thomas Allen reiterated an “obese” score on the inventory, with a $31 worth goal. That’s greater than double the place the shares at present reside. Whereas acknowledging DraftKings is coping with near-term losses, the analyst argues buyers are being shortsighted and that corporations making the transition to worthwhile from money-losing can ship important upside. Allen believes DraftKings can be part of that group.
The analyst provides that whereas the US iGaming and on-line sports activities betting markets will ultimately be “very giant,” there will probably be a small variety of market share winners, and DraftKings will probably be a type of operators.
DraftKings joins Amazon (NASDAQ:AMZN), Chipotle (NYSE:CMG), Ferrari (NYSE:RACE), and Ross Shops (NASDAQ:ROST) as the patron discretionary names on the Morgan Stanley excessive conviction record.
The Boston-based sportsbook large is the one gaming title within the group.
Ready on DraftKings Earnings
The each day fantasy sports activities (DFS) behemoth studies first-quarter outcomes earlier than the open of US markets on Friday, Could 6. Analysts predict a lack of $1.24 per share. Over the previous month, there’s been upward revision and two cuts to that estimate by analysts following DraftKings inventory, in response to Zacks Funding Analysis.
Traders will possible pay shut consideration to any replace to the 2022 steering the corporate provides on Friday. In February, the operator forecast 2022 gross sales of $1.85 billion to $2 billion on earnings earlier than curiosity, taxes, depreciation and amortization (EBITDA) lack of $825 million to $925 million.
That outlook doesn’t account for the corporate’s still-pending launch in Ontario, Canada. Nor does it consider sports activities betting going stay in Maryland.
Traders may also possible need an replace on the acquisition of Tilman Fertitta’s Golden Nugget On-line Gaming (NASDAQ:GNOG). Since that deal was introduced final August, shares of each the suitor and goal plunged. However Fertitta stated it stays on observe to shut and that he’s dedicated to being a long-term DraftKings shareholder.
