Piper sees ‘several’ positives in DraftKings horse racing pact

Piper Sandler analyst Matt Farrell keeps an Overweight rating on DraftKings (DKNG) with a $21 price target after the company announced a multi-year agreement with Churchill Downs (CHDN) in order to offer pari-mutuel wagering on horse racing on the DraftKings platform. TwinSpires, a Churchill Downs subsidiary, is expected to provide the deposit wagering technology for DraftKings, Farrell tells investors in a research note. The analyst views the agreement as a positive "for several reasons." It further expands the total addressable market for DraftKings in the United States and creates even further cross-selling opportunities for existing users, says Farrell. In addition, the "immediately profitable nature of the agreement should only help on the company’s path to EBITDA profitability," the analyst writes.