UBS Analyst Raises Draftkings' Price Target by 27.3% Following Strong Q4 Earnings

UBS's Robin M. Farley raised their price target on Draftkings (NASDAQ: DKNG) by 27.3% from $44 to $56 on 2024/03/05. The analyst maintained their Strong Buy rating on the stock.

In a research note, Farley stated that the revised estimates and price target reflect "the sustained improvement in structural hold and unit economics across the company's existing business."

Draftkings recently reported its earnings for the fourth quarter of 2023 and the full year of 2023. In Q4 2023, the company reported a loss per share of $0.10, which missed the Zacks Consensus Estimate of $0.06 EPS. However, it beat the loss of $0.53 per share in Q4 2022 by 81.1%. The revenue for Q4 2023 was $1.23 billion, beating the Zacks Consensus Estimate by 0.74% and surpassing Q4 2022's revenue of $855.13 million by 43.8%. The adjusted EBITDA for Q4 2023 was $151 million, a significant improvement from Q4 2022's $(49.9) million.

For the full year of 2023, Draftkings reported a loss per share of $1.73, up 45.2% from the previous year. The revenue for FY 2023 was $3.665 billion, a 63.6% increase from FY 2022. The adjusted EBITDA for FY 2023 improved to $(151) million from FY 2022's $(721.8) million.

Looking ahead to FY 2024, Draftkings provided guidance. The company expects revenue in the range of $4.65 billion to $4.9 billion, representing a year-over-year growth of 27% to 34%. This guidance is higher than the previous range of $4.5 billion to $4.8 billion. The adjusted EBITDA guidance for FY 2024 is $410 million to $510 million, up from the previous range of $350 million to $450 million. It is important to note that the guidance excludes the estimated impact of the company's proposed acquisition of Jackpocket.

CEO & Co-founder Jason Robin expressed optimism about the company's performance, stating, "DraftKings ended 2023 with excellent performance across customer acquisition, retention, and engagement as well as structural sportsbook hold percentage despite the worst stretch of sport outcomes we have seen as a public company in Q4." He also emphasized the company's focus on disciplined execution, customer centricity, and product differentiation.

CFO Jason Park highlighted Draftkings' outstanding revenue growth and operating efficiencies in 2023. He mentioned that based on strong underlying fundamentals and customer acquisition, the company is raising the midpoint of its FY 2024 revenue guidance to $4.775 billion from $4.65 billion and the midpoint of its FY 2024 Adjusted EBITDA guidance to $460 million from $400 million. Park sees this as a demonstration of clear progress towards the goals presented at the company's Investor Day in November 2023.

It is worth noting that all top-rated analysts currently rate DKNG as a Strong Buy or Buy, with none suggesting a Hold or recommending selling the stock.

Since the release of Draftkings' latest quarterly report on February 15, 2024, the stock price has declined by 4.1%. However, it has shown significant year-over-year growth of 122.1%, outpacing the S&P 500, which has seen a 25.4% increase during that period.

UBS analyst Robin M. Farley, who raised the price target on Draftkings, has been ranked in the top 6% of Wall Street analysts by WallStreetZen. With an average return of 41.7% and a win rate of 69.2%, Farley specializes in the Consumer Cyclical and Industrials sectors, among others.

DraftKings Inc. is a digital sports entertainment and gaming company that operates in multiple countries. It offers sports betting and gaming technologies and operates iGaming through its DraftKings brand and Golden Nugget Online Gaming. The company's Sportsbook is live in the United States, and it also offers daily fantasy sports products internationally. Additionally, DraftKings owns Vegas Sports Information Network (VSiN), a multi-platform broadcast and content company.

Want to get in touch? Email us at news@wallstreetzen.com.

WallStreetZen and Don Francis do not hold any positions in the companies mentioned in this article. The information and statistics provided herein are presented for general informational purposes only and may not be accurate, complete, or up-to-date. It should not be interpreted as a recommendation to buy or sell any stocks and should not be solely relied upon for making investment decisions. It does not take into account your financial situation or risk profile. All investors should conduct their own investment due diligence before buying a stock. WallStreetZen expressly disclaims any liability for the accuracy, reliability, or completeness of the analysts' information, price targets, ratings, or opinions.