DraftKings (NASDAQ:DKNG) was cut to Hold from Buy at CFRA on Friday, with the firm's analysts raising the price target for the stock by $2 to $42 per share.
CFRA cited the company's valuation as a reason for the downgrade but said they raised the price target based on 4x its 2024 revenue estimate and slightly higher than peers due to its market share position, leading technology, and first mover advantage.
CFRA said, "DKNG posted normalized Q4 EPS of $0.29 vs. -$0.50, $0.11 above consensus estimates on revenues of $1.23B vs. $855M and $9M below estimates."
They also noted that Q4 monthly unique players grew 37% year-on-year to 3.5 million while average revenue per MUP grew 6% to $116 due to an improvement in the company's sportsbook hold rate.
"DKNG raised its full-year guidance for revenues of $4.65B-$4.90B in 2024 and adjusted EBITDA of $460M at the midpoint. After a +150% move higher in the past year, we downgrade shares based on valuation," said the analysts. "We believe DKNG will continue to grow revenues and drive operating leverage; however, we think shares are fairly valued, trading above 4x 2024 revenue guidance."