On Tuesday, Needham maintained a positive stance on DraftKings Inc. (NASDAQ:DKNG) stock, reiterating its Buy rating and a price target of $60.00. The firm highlighted the onset of the NFL season as a pivotal period for sportsbook operators, noting the competitive environment for new customer promotions and market share dynamics.
The sports betting landscape is heating up with more aggressive promotional offers compared to the previous year. DraftKings has upped its new customer incentive to $250 in free bets. Meanwhile, Fanatics is currently leading the pack with an offer of $1,000 in matched bets, regardless of the outcome.
Market share continues to be dominated by DraftKings and FanDuel, according to the latest observations. In addition, ESPN Bet, which is pending regulatory approval for its New York launch, has rolled out a significant product update just before the NFL season kickoff.
Needham plans to publish a weekly tracker throughout the season, providing insights into new customer promotions, estimated hold, and app store rankings. The firm also shared its "best bets" segment, which includes predictions on NFL and player performance outcomes for the upcoming season.
The analyst's picks for the season include betting on the New York Giants to finish with under 6.5 wins, Marvin Harrison Jr. to lead in receiving yards among rookies, Breece Hall to accumulate over 1,000 rushing yards and 500 receiving yards, and CJ Stroud to become the league leader in passing yards. These insights and predictions aim to provide a glimpse into the potential betting trends and outcomes for the NFL season.
In other recent news, DraftKings has been the subject of significant developments. The company's decision to withdraw its gaming tax surcharge plan was noted, a move that is expected to be well-received by investors.
DraftKings' recent quarterly report showed an 80% increase in new online sports betting and iGaming customers year-over-year and a 26% rise in revenue, reaching $1.104 billion. Moreover, the company reduced its marketing costs by over 40% and announced a share repurchase program of up to $1 billion.
Analyst firms Craig-Hallum, Jefferies, Needham, and Benchmark have maintained a Buy rating for DraftKings, indicating confidence in the company's strategies and potential.
Craig-Hallum highlighted adjustments to the third and fourth quarter estimates for DraftKings, noting a shift toward increased promotional spending in the third quarter. Benchmark predicts a 21% growth in 2025, driving DraftKings' stock potential.
Morgan Stanley (NYSE:MS) and Truist Securities have adjusted their price targets for DraftKings, maintaining an Overweight and Buy rating respectively, despite the company's decision to retract its operational surcharges.
These recent developments indicate DraftKings' strategic positioning and operational milestones are setting the stage for robust performance. However, it is important to note that these are analyst prognostications and not a guarantee of future performance.
InvestingPro Insights
As DraftKings Inc. (NASDAQ:DKNG) gears up for the NFL season, a key period for sportsbook operators, InvestingPro data and tips offer some financial context to the company's market position and outlook. With a significant market capitalization of $16.75 billion, DraftKings showcases robust revenue growth, with the last twelve months as of Q2 2024 reflecting a 43.26% increase. This growth trajectory aligns with analysts' expectations of sales growth in the current year, as mentioned in one of the InvestingPro Tips.
Despite not being profitable over the last twelve months, analysts are optimistic, predicting profitability for DraftKings this year. This optimism may be reflected in the company's aggressive promotional strategies to attract new customers during the NFL season. DraftKings' stock price movements have been quite volatile, which could be of interest to investors looking for dynamic market plays.
For those considering an investment in DraftKings, there are over 11 additional InvestingPro Tips available, offering deeper insights into the company's financial health and market potential. These tips might prove invaluable for understanding DraftKings' position in the competitive sports betting landscape.
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