Published on: October 31, 2024, 02:51h.
Last updated on: October 31, 2024, 02:53h.
DraftKings (NASDAQ: DKNG) is set to report its third-quarter earnings on Nov. 7, with expectations of surpassing estimates and possibly raising future forecasts. Stifel analyst Jeffrey Stantial predicts that the company will exceed third-quarter estimates and raise its 2024 guidance, continuing its trend of outperforming expectations since going public.
Stantial suggests that favorable sport outcomes in the third quarter could be a positive factor, but potential bettor success in later NFL weeks might impact fourth-quarter results. Despite this, he maintains a bullish outlook on DraftKings with a $48 price target, indicating a 35.7% upside potential.
DraftKings Future Outlook
With only a few months left in 2024 at the time of the earnings release, DraftKings could provide guidance for 2025. Stantial believes the company may project an EBITDA range of $900 million to $1 billion for 2025, which excludes any potential benefits from previously discussed regulatory changes.
This forecast was mentioned in the second-quarter report and could leave room for upward revisions next year, potentially boosting the stock.
If DraftKings sets $900 million to $1 billion as the baseline for 2025 EBITDA, it could allow for positive adjustments in the future, benefiting shareholders.
“We view the stock as moderately appealing with favorable risk-reward ahead of the earnings, although market share trends may turn negative thereafter,” Stantial added. “Long-term, we remain optimistic due to strong user metrics, scale advantages, and potential for enhanced cash flow in the future.”
DraftKings Market Expansion
Although specific details are not disclosed, Stantial mentions that DraftKings has been gaining market share in online sports betting and iGaming recently. Data from internet casinos in Michigan and New Jersey indicates that DraftKings has increased its presence in the online gaming sector.
“DraftKings has notably gained market share in recent months, primarily driven by sports betting seasonality. Our estimates show an increase in handle share for DraftKings from July to September compared to previous years,” Stantial pointed out.
The company’s ability to retain customers and potentially increase promotional efforts for new client acquisition could further strengthen its position in the market.