Draftkings' Price Target Raised by Barclays Analyst After Strong Q1 Performance

Barclays's Brandt Montour raised their price target on Draftkings (NASDAQ: DKNG) by 3.8% from $52 to $54 on 2024/05/06. The analyst maintained their Strong Buy rating on the stock.

Montour's positive outlook on Draftkings comes after the company's impressive first-quarter results. Draftkings reported earnings per share (EPS) of $0.03, surpassing the Zacks Consensus Estimate of $(0.28) and the EPS of $(0.51) in the same period last year. The company also reported revenue of $1.18 billion, beating the Zacks Consensus Estimate by 4.40% and showing a significant increase of 53% compared to the first quarter of 2023.

The robust performance was not limited to the first quarter alone. Draftkings management provided an optimistic outlook for the full year 2024. They guided for revenue of $4.8 billion to $5.0 billion, up from the previous guidance of $4.65 billion to $4.90 billion. They also projected EBITDA of $460 million to $540 million, higher than the previous guidance of $410 million to $510 million.

Co-founder and CEO Jason Robins expressed his satisfaction with the company's performance, highlighting the healthy revenue growth and a scalable fixed cost structure that positions Draftkings for improved Adjusted EBITDA. Robins emphasized their commitment to maximizing shareholder value through innovation, operational excellence, and disciplined capital allocation.

CFO Alan Ellingson added that the company expects the Adjusted EBITDA Flow-through Percentage to exceed 50% for the full year 2024. This is anticipated as Draftkings expands its gross margin, maintains cost discipline, and invests in promotions and marketing according to their targets for Lifetime Value to Customer Acquisition Cost (LTV to CAC).

Montour's positive rating and increased price target on Draftkings are in line with other analysts' sentiments. Deutsche Bank's Carlo Santarelli raised their price target from $34 to $35 and maintained a Hold rating on the stock. Stifel Nicolaus's Jeffrey Stantial increased their price target from $50 to $51 and maintained a Strong Buy rating. BMO Capital's Brian Pitz raised their price target from $51 to $54 and also maintained a Buy rating.

Overall, 93.8% of top-rated analysts currently rate DKNG as a Strong Buy or Buy, with 6.3% considering it a Hold. None of the analysts recommend or strongly recommend selling the stock.

Since the release of Draftkings' latest quarterly report on May 2, 2024, the stock price has increased by 2.4%. Year-over-year, the stock has surged by an impressive 82.3%. During this period, Draftkings has outperformed the S&P 500, which has seen a 25.2% increase.

Barclays analyst Brandt Montour is highly regarded in the industry, ranked in the top 11% out of 4,575 Wall Street analysts by WallStreetZen. With an average return of 8.2% and a win rate of 51.3%, Montour specializes in the Industrials and Technology sectors, among others.

DraftKings Inc. is a digital sports entertainment and gaming company operating globally. The company provides multi-channel sports betting and gaming technologies, powering sports and gaming entertainment in 17 countries. DraftKings operates iGaming through its DraftKings brand in five states and Golden Nugget Online Gaming in three states. The company's Sportsbook is live with mobile and retail betting operations in the United States, complying with regulations in 18 states. DraftKings' daily fantasy sports product is available in six countries internationally, covering 15 distinct sports categories. Additionally, the company owns Vegas Sports Information Network (VSiN), a multi-platform broadcast and content company. Founded in 2011 and headquartered in Boston, Massachusetts, DraftKings Inc. continues to expand its presence in the rapidly growing online gaming industry.

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