On Thursday, JPMorgan (NYSE:JPM) adjusted its price target for DraftKings Inc. (NASDAQ: NASDAQ:DKNG), increasing it to $54 from the previous $48, while maintaining an Overweight rating on the stock. The revision follows the recent Flutter (LON:FLTRF) Capital Markets Day, where insights into the North American Online Sports Betting (OSB) and iGaming industry were shared. Flutter Entertainment is the parent company of FanDuel, DraftKings' primary competitor.
The firm's confidence in raising the price target stems from positive indicators in the industry's growth and momentum. This sentiment is bolstered by Flutter's decision to significantly increase its U.S. Total Addressable Market (TAM) forecast. Despite some skepticism about the aggressive nature of the forecast—anticipating 25% of the U.S. having access to legalized iGaming—JPMorgan sees this as a positive reflection on the sector's potential.
Furthermore, Flutter emphasized the long-term advantages of having a scaled business model during their presentation. This aspect of Flutter's strategy is seen as a favorable sign for DraftKings as well. The analyst suggests that the upbeat outlook on market expansion and scale efficiencies from Flutter could be indicative of a broader upswing for key players in the industry.
JPMorgan's perspective on the market dynamics implies that the competition in the North American OSB and iGaming sector may be narrowing down to a contest primarily between DraftKings and FanDuel. The firm's updated assessment of DraftKings reflects a belief in the company's strong positioning within this competitive landscape.
DraftKings' new price target and the sustained Overweight rating indicate JPMorgan's expectation that the company will continue to perform well in the evolving market. The industry's growth trajectory and the strategic moves by its leading companies remain focal points for investors and market watchers alike.
In other recent news, DraftKings has seen several significant developments. The company reported a substantial 80% increase in new online sports betting and iGaming customers year-over-year, with a 26% rise in revenue, reaching a total of $1.104 billion. At the same time, DraftKings managed to cut its marketing costs by over 40% and announced a share repurchase program of up to $1 billion.
DraftKings has also been the recipient of positive attention from several analyst firms. Needham maintained its Buy rating and a $60.00 price target for DraftKings, despite a downward revision in the company's adjusted EBITDA projections for 2025 and 2026. TD Cowen also retained its Buy rating after DraftKings' acquisition of Simplebet, a move expected to enhance its in-game betting offerings.
Morgan Stanley (NYSE:MS) maintained an Overweight rating for DraftKings, indicating a 30% upside, despite a less than stellar performance in the second quarter. 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.
Analyst firms such as Rosenblatt, Susquehanna, Needham, Craig-Hallum, Benchmark, and Jefferies have maintained a positive outlook on DraftKings, with several of them increasing their price targets.
InvestingPro Insights
Following JPMorgan's updated price target for DraftKings Inc. (NASDAQ: DKNG), InvestingPro data provides additional context for investors considering the stock. DraftKings has a market capitalization of $20.03 billion, reflecting its significant presence in the online sports betting and iGaming industry. The company's revenue growth has been impressive, with a 43.26% increase over the last twelve months as of Q2 2024, signaling strong market demand for its offerings. Despite this, the company operates at a negative operating income margin of -10.93% for the same period, which investors should weigh against the potential for future profitability.
InvestingPro Tips highlight that analysts expect net income and sales growth for DraftKings in the current year, which may support the stock's positive momentum, evidenced by a 17.13% price total return over the last month. However, it's worth noting that 7 analysts have revised their earnings downwards for the upcoming period, which could suggest some caution is warranted. Additionally, the stock's volatility and the fact that it is trading at a high revenue valuation multiple of 15.37 as of Q2 2024, should be considered when evaluating its current price level.
For those looking to delve deeper into DraftKings' financials and forecasts, there are over 13 additional InvestingPro Tips available at https://www.investing.com/pro/DKNG, offering a more comprehensive analysis to help inform investment decisions.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.