Analyst Mike Hickey from Benchmark Co. reiterated a Buy rating on DraftKings and keeping the price target at $43.00.
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Mike Hickey has given his Buy rating due to a combination of factors that highlight DraftKings’ potential for long-term growth. Despite anticipated challenges in the upcoming quarter, such as weak hold and high promotional expenses that may impact profitability, Hickey believes these issues are already reflected in the current valuation. The company’s strategic acquisition of Railbird Technologies is seen as a pivotal move, allowing DraftKings to enter the prediction markets and expand its total addressable market.
This acquisition not only enhances DraftKings’ regulatory and technological capabilities but also positions it to capitalize on new growth opportunities in digital gaming. The move is both a defensive strategy to maintain relevance amid changing regulations and an offensive strategy to tap into a rapidly growing market. Additionally, the broader industry trends and potential state-level legalization efforts could significantly expand DraftKings’ market, providing substantial long-term growth prospects. Hickey’s valuation approach, transitioning to a FY26 AEBITDA-based model, supports a price target of $43, reinforcing the Buy rating as the stock offers exposure to promising growth vectors.
In another report released yesterday, Needham also maintained a Buy rating on the stock with a $52.00 price target.