A warm Nov by US sports bettors could press on DraftKings’ (NASDAQ: DKNG) fourth-quarter results, according to Benchmark psychoanalyst Mike Hickey.
In a remark to clients today, Hickey favorable results for bettors inwards the eleventh month of the twelvemonth may hold sapped DraftKings’ sustain per centum by 150 base points (1.5%). If accurate, that rock-bottom hold rate could weigh on the operator’s fourth-quarter revenue and adjusted earnings before, interest, taxes, depreciation, and amortisation (EBITDA) past $50 1000000 and $35 million, respectively.
The psychoanalyst based that assumption on DraftKings’ steering calling for 2023 Earnings Before Interest Taxes Depreciation and Amortization red ink of $105 jillion on revenue of $3.695 billion, which was issued last November. While Dec information isn’t fully available, Hickey added that DraftKings’ hold up per centum likely normalized inward the 9% range of mountains inwards the last-place month of 2023, indicating Nov was likely an anomaly.
He rates shares of the sportsbook manipulator “buy” with a $41 price target, which implies upside of nigh 24% from today’s close.
DraftKings 2024 Outlook Remains Strong
The gaming company is scheduled to redeem results for the Oct through December stop on Feb. 15 after the close-fitting of US markets. It has a knack for lifting top and underside dividing line forecasts when it delivers quarterly results – something analysts and investors will likely live watching for next month.
Boston-based DraftKings forecasts a positive 2024 Earnings Before Interest Taxes Depreciation and Amortization of $350 gazillion to $450 meg on sales of $4.5 one thousand million to $4.8 billion. That implies the gaming companionship could follow profitable on an Earnings Before Interest Taxes Depreciation and Amortization cornerstone for to the highest degree — if non all — of 2024 patch easy shattering topline records.
For 2025, the online sportsbook manipulator said it expects revenue in the mid-$5 billion mountain chain on familiarised EBITDA of $900 million, with those figures growing to $6.2 one million million and $1.4 billion, respectively, the following year. In 2028, the manipulator expects to notch sales of $7.1 one thousand million on Earnings Before Interest Taxes Depreciation and Amortization of $2.1 billion.
There may be some onus on DraftKings to pitch the goods inward terms of upped direction because after the stock up more than tripled utmost year, it throw 7.50% this hebdomad as investors set-aside(p) profits inwards the previously high-flying shares.
Competition Comments Could Be Key
With the rock-bottom Nov sustain per centum inwards the rearview mirror, unity of the other issues analysts and investors are clever to centering on with regards to DraftKings is the operator’s ability to keep and grow securities industry deal amid a flurry of unexampled contention inward the sports wagering space.
Data suggest ESPN Bet and Fanatics are sour to solid state starts inwards the states in which they’re offering online sports wagering, but the numbers also sustain incumbents such as DraftKings and FanDuel aren’t yet intuitive feeling often pressure from new rivals.
That sentiment has been echoed past DraftKings, which said it welcomes unexampled competitors and sees that as a ratify of a growing, maturing industry.
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