Publication date: May 10, 2021, 11: 43 hrs.
Last updated: May 10, 2021, 14: 15 hrs.
DraftKings (NASDAQ: DKNG) continues its steep decline today, as at least three analysts lowered the bookmaker's price forecast today.
Shares of provider Daily Fantasy Sports (DFS) were down more than six percent in early trading Monday after stumbling 14. 54 percent last week and 20. 77 percent over the past month. DraftKings is off 38 percent 52-week high in March and it seems all this bloodletting is inspiring analysts to lower price estimates for the name.
Morgan Stanley analyst Thomas Allen cut his DraftKings target price to 63 from $ 66, but reiterated an "outperform" rating on the stock, offering some bullish comments.
Revenues were well above our expectations and 2021 revenue guidance was much higher (again), but management has targeted higher earnings before interest, taxes, depreciation and amortization (EBITDA) this year and will issue significantly more share-based calculations than we expected, "Allen said.
Last week, Boston-based DraftKings reported a lower-than-expected revenue loss in the first quarter, outperforming Outlook nsus while raising 2021 revenue guidance.
Allen sees DraftKings commanding 25 percent of the sports betting market and 18 percent of the iGaming segment. His target of $ 63 is a base case scenario and an extreme case of bearish, time could drop to $ 11. However, his bullish forecast is 182 - almost four times the current number. )
Lack of catch-up profitability in DraftKings stock
DraftKings became a standalone public company in April 2020, and at that time there were concerns about the operator's customer acquisition costs and runway to profitability.
The most optimistic forecasts indicate that the gaming company will stop losing money sometime in 2022. However, some analysts believe that EBITDA losses will not stop until next year. Needham analyst Bernie McTernan lowered his DraftKings price estimate to $ 73 from $ 81 just two weeks after revealing his original forecast.
He cited growing EBITDA losses and the market's preference for share value over growth rates as reasons for the downgrade. But he still rates DraftKings a "buy" and is enthusiastic about the company's plans to integrate social media into its sports betting platform, which could create an enviable network effect.
Craig-Hallum analyst Ryan Sigdahl lowered his target on DraftKings shares to $ 60 from $ 70. He still rates the name a "buy" and says "aggressive" spending will pay dividends in the long run as the operator becomes one of the leaders in a market likely to be dominated by a small number of players.
In defense of DraftKings
Some analysts are sticking with distressed gaming capital. Cowen analyst Stephen Glagola raised his DraftKings revenue estimates, while noting that the company's projections for the second half of this year could prove conservative.
Michael Graham of Canaccord Genuity also raised revenue estimates, maintaining
"We are encouraged by the favorable industry environment as progress in the legalization of online sports betting has accelerated across the country and numerous recent strategic partnerships and acquisitions are helping DraftKings develop its media strategy and expand its product offerings," the analyst said in a note to clients. "Despite the competitive market, these factors give us confidence that significant revenue growth will continue as the United States adopts online sports betting."