DraftKings Endures Spate of Price Target Cuts
After shedding to a greater extent than a billet of its time value finally week, DraftKings (NASDAQ:DKNG) is dealing with to a greater extent high-risk word today. At least VIII Wall Street analysts are cutting price targets on the downtrodden sports betting stock.
Adding insult to injury, 3 of those price approximation revisions are at $19, implying only modest upside from the $18 palm at which the sports wagering equity currently resides. Today’s most dramatic DraftKings damage outlook adjustment comes good manners of Wells Fargo analyst Book of the Prophet Daniel Politzer, who inward downgrading the shares to “equal weight” from “overweight,” pares his terms estimate to $19 from $41.
We remain bullish on US digital gaming, but favour Caesars Entertainment and Flutter Entertainment here; our downgrade is troupe specific and reflects our growing worry on DKNG’s path to profitability, presumption its fast-growing operating expenses (as opposed to extraneous marketing/promotional spend, which hold been a fear among investors),” said the analyst inwards a short letter to clients.
Wall Street’s bearish survey on DraftKings arrives after the stock up tumbled more than 21 percent last-place Fri — a lantern slide prompted by the sportsbook manipulator forecasting a wider-than-expected 2022 earnings before interest, taxes, depreciation and amortization (EBITDA) loss. Further irking investors are DraftKings’ costs, which Politzer notes will prove to a greater extent rapidly this yr than revenue.
“DKNG’s implied 2022 [operational expense] will step-up 60 percent year-over-year vs. its expected ~49 percent revenue growth,” notes the analyst.
DraftKings Insult to Injury
Heading into today, DraftKings already endured multiple price point cuts this year, as analysts soured on mellow promotional disbursement and a lengthy road to profitability.
With so many analysts taking the ax to DraftKings terms forecasts, the consensus estimation on the figure is now $47.27, or to a greater extent than II and a half times higher than where the gillyflower currently resides. That means that inwards the span of a month, DraftKings’ damage aim fell past nearly $12. As latterly as utmost October, the consensus guess on the gaming identify was snug to $70.
Of the analysts passementerie toll outlooks on DraftKings today, only Politzer downgraded the stock, spell trio maintained the equivalent weight of “hold” ratings on the shares.
There’s one upgrade to speak of, as Philip Roth Capital’s Edward IV Engel — long a DraftKings bear — lifts his rating on the caudex to “neutral” from “sell” spell reducing his price forecast to $19 from $23.
Good News, Bad News
In a study to clients today, Engel praised DraftKings for increasing transparency, spell noting the company’s 2022 revenue outlook doesn’t include the pending acquisition of Golden Nugget Online Gaming (NASDAQ:GNOG) nor does it shine entries into Maryland, Ohio, and Ontario, Canada.
The psychoanalyst believes GNOG could add together $100 1000000 in revenue, piece Maryland and Ontario could take another $50 one thousand thousand to $100 million. However, he offers up some concerning tidbits, including that the operator “is keen it come together with liquidity,” and that a cap evoke would follow necessary to monetary fund expansion into California, Texas, and Everglade State if those states legitimatise online sports betting (OSB).
“While we trust DKNG tin can avoid nurture equity before its converts mature inwards 2028, this would require sufficiency EBITDA inwards 2026-27 to subvention young debt (or for DKNG shares to rebound 300 percent+ to $70). That said, if California, Florida, or Lone-Star State were to legitimize OSB before then, this would speed immediate payment combust and likely require an equity raise,” said Engel.
DraftKings sold $1.3 1000000000 inward exchangeable debt last-place year, and holders of those bonds experience rights to win over to DraftKings equity at $70 a deal inward 2028.
This content is brought to you by the best Mega888 Slot Gamein Malaysia.