DraftKings Poised for Growth: Buy Rating Affirmed with Optimistic Outlook on Strategic Initiatives and Market Position

In a report released today, Shaun Kelley from Bank of America Securities reiterated a Buy rating on DraftKings (DKNG – Research Report), with a price target of $54.00.

Shaun Kelley has given his Buy rating due to a combination of factors that suggest a positive outlook for DraftKings (ticker: DKNG). Kelley’s optimism is partially rooted in the company’s recent management meeting, where the transition of Jason Park to Chief Transformation Officer and the acquisition of Jackpocket were highlighted. This acquisition, along with initiatives in AI and automation, are anticipated to drive cost savings and revenue generation. The company’s effective cross-sell strategy from daily fantasy to online sports betting and iGaming is expected to be replicated with Jackpocket, potentially expanding DraftKings’ market reach and customer acquisition. Furthermore, Kelley believes the integration of Jackpocket can enhance the company’s single app and wallet capabilities, providing a substantial upsell opportunity.

Kelley’s confidence is further bolstered by DraftKings’ robust online sports betting and iGaming businesses, which remain healthy and competitive through a balanced approach to marketing and technological innovation. The growth in iGaming is seen as a result of increasing customer awareness and existing player expansion. DraftKings also displays promotional discipline and appears unfazed by new market entrants, positioning itself to benefit from an expanding total addressable market. Management’s confidence in the company’s strong market position and product pipeline supports the expectation of continued growth. Moreover, with a targeted free cash flow conversion and a discerning approach to mergers and acquisitions, the company is well-positioned for strategic capital allocation that could include share buybacks, reinforcing the Buy rating with a raised price objective of $54.

According to TipRanks, Kelley is a 4-star analyst with an average return of 3.2% and a 52.42% success rate. Kelley covers the Consumer Cyclical sector, focusing on stocks such as Vail Resorts, Penn National Gaming, and Hilton Worldwide Holdings.

In another report released yesterday, JMP Securities also maintained a Buy rating on the stock with a $52.00 price target.

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DraftKings (DKNG) Company Description:

DraftKings is a leading gaming and digital sports entertainment company. It offers a wide range of online products, including sports betting (known as “Sportsbook”), online casino games (“iGaming”), and daily fantasy sports (“DFS”). Additionally, it provides retail sportsbook services, media content, and various consumer products. It also designs and develops software for sports betting and casino gaming.