DraftKings holds, improved consistency praised by analysts
DraftKings (NASDAQ: DKNG ) earned high praise from two sell-side analysts on Thursday due to improved cost management and above-average market presence in certain markets.
In notes to clients on Thursday, Deutsche Bank analysts Carlo Santarelli and J.P. Morgan's Joseph Greff were moderately bullish on DraftKings, with Santarelli placing The stock's price target was raised to $24 from $22. Greff raised his price target on the name to $20. Both were below Thursday's closing price of $25.23. Santarelli raised DraftKings' revenue forecast for 2023 and 2024, citing better-than-expected iGaming metrics.
While the gaming company has made cost reduction a focus this year, Deutsche Bank analysts believe the operator will benefit from an extended holding period.
While DKNG's cargo space improvement, the primary driver of year-over-year market share gains, was strong, it was primarily driven by total cargo space strength rather than related advertising discipline," Santarelli wrote.
He added that factors such as wider spreads, the same game mix and operators' increasing ability to identify and limit smart bettors bode well for the industry, including DraftKings.
Golden Nugget Online Trade Pays Off for DraftKings
It has been 14 months since DraftKings completed its $1.56 billion stake acquisition of Tilman Fertitta's Golden Nugget Online Gaming (GNOG). The deal is now paying off for the buyer.
The acquisition of GNOG helped DraftKings become a leader in the internet casino space while gaining market share in states where GNOG operates. When it comes to market share, Santarelli estimates DraftKings' share is as high as 31%, thanks to strong starts in states that have recently launched online sports betting, including Kansas, Maryland, Massachusetts and Ohio.
"We view the persistence of DKNG's OSB share as positive and believe DKNG is likely to maintain and possibly even expand its share unless there are fundamental changes in the industry due to new competition, which we believe will be "unlikely to sustain" Yes," the analyst noted.
As for new states being added to the DraftKings paper, Santarelli said Florida likely won't be one of them because the Seminole Tribe controls gambling in the state.
Parlay continues to rise, but beware of turning points
The same mix of games has proven very profitable for operators like DraftKings and FanDuel, where the bets are designed to attract customers and increase player loyalty.
However, there is another side to the story. Santarelli pointed out that as operator waiting times increase, punters' entertainment costs increase as well, meaning the time customers can persist in placing bets is limited, resulting in greater benefits for operators. He noted that the advent of 6-5 blackjack and triple-zero roulette on the Las Vegas Strip has led to increased revenue for casino operators but a decreased share of table games.
"While we don't believe this threshold has been reached yet, given FanDuel's experience relative to the broader market, we also don't believe it will be reached anytime soon. There are some historical anecdotal references to situations that seem to suggest it is indeed happening," the analysis said The teacher concluded.
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Source: www.casino.org
