Anyone looking at DraftKings’ (NASDAQ:DKNG) Q4 post-earnings display might have gotten a little dizzy. The subsequent session was a rollercoaster affair with the shares dropping initially only to claw their way up again. Ultimately, the stock finished up at roughly the same spot it was at beforehand, reflecting a mixed showing from the sports betting giant.
In Q4, revenue rose by 43.9% year-over-year to a record $1.23 billion but falling just shy of the consensus estimate while also slowing down for the second consecutive quarter. MUPs (monthly unique payers) rose by 3.5 million vs. the 3.44 million expected by consensus while average revenue per MUP saw a 6% uptick to $116 compared to the Street’s forecast of $119.7.
At the bottom-line, adj. EPS of $0.29 fared better than the analysts’ projections by $0.11. And moving forward, the company raised its full-year revenue guide to the range between $4.65 billion to $4.90 billion, up from the prior $4.50 billion to $4.80 billion range. At the midpoint, that’s above consensus at $4.67 billion. The company also increased its 2024 adj. EBITDA outlook from the prior $350 million to $450 million range to the range between $410 million and $510 million.
Additionally, DraftKings also announced the acquisition of lottery app company, Jackpocket, for $750 million, which it will purchase with 55% of cash and 45% in DKNG stock.
Investors might have shown a muted reaction to the results, but J.P. Morgan analyst Joseph Greff liked what’s on offer. Following the print, the analyst bumped his 2024 revenue, EBITDA, free cash flow, and adjusted EPS estimates higher.
“We reaffirm our Overweight rating on our anticipation of DKNG’s continued execution in an appealing sector, with attractive same-store and new market growth prospects, and an ability to leverage its scale to realize operating expense rationalization. We think DKNG has a strong moat (product, scale, brand) that should allow it to compete against new entrants like PENN’s ESPN BET (4Q23 to wit) and others, much like it has successfully competed in the recent past with newer entrants (like Caesars, for example),” Greff opined.
That Overweight (i.e., Buy) rating is accompanied by a new price target. Greff’s figure rises from $45 to $55, suggesting the stock has room for growth of 23% from current levels. (To watch Greff’s track record, click here)
Most analysts agree with Greff’s thesis. The stock claims a Strong Buy consensus rating based on a mix of 23 Buys, 3 Holds and 1 Sell. Meanwhile, the $47.62 average price target implies shares will surge ~16% from current levels. (See DraftKings stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
