DraftKings Inc., the online sports betting company, received an upgraded rating from Truist Securities analyst Barry Jonas, who believes that the company’s profitability is set to surge. Jonas lifted his rating on DraftKings to buy from hold and stated that the training wheels are off for the company. He noted that DraftKings has successfully navigated early threats and is now on a clear path towards significant and sustainable profitability.
According to Jonas, DraftKings may currently have the best top-line story in the gaming industry, which has been plagued by macro concerns. He sees a more rational promotional landscape in the world of online sports betting, and this positive development has arrived faster than anticipated. Jonas also highlighted the narrowing market-share gap between DraftKings and FanDuel, along with improvements in structural holds as customers engage in more parlays.
Looking ahead, DraftKings is scheduled to hold an investor day in November. Jonas sees this event as a potential catalyst for the stock, as the company has historically raised expectations during these types of gatherings. He expects DraftKings to revise its view of the U.S. total addressable market to $92 billion, up from $80 billion, and anticipates the company to provide upbeat projections on state-level profitability.
As a result of Jonas’ bullish outlook, he increased his price target on DraftKings shares from $31 to $44, indicating a nearly 40% potential upside from Monday’s closing price of $31.63. Jonas is joined by Wells Fargo analyst Daniel Politzer, who also turned bullish on DraftKings shares on Monday.
DraftKings shares have already surged nearly 180% this year, and these recent upgrades further underline the company’s potential for future growth. As DraftKings continues to make strategic advancements and capture a larger market share, investors are optimistic about the company’s profit potential and market opportunities.
Overall, both analysts’ upgrades reflect the positive sentiment around DraftKings and its ability to generate sustainable profitability in the competitive online sports betting industry. The upcoming investor day in November will likely provide further insights into the company’s growth prospects, validating the analysts’ increased confidence in the stock. Investors will be closely watching DraftKings as it continues to solidify its position and capitalize on the expanding market for online sports betting.
