Shares of DraftKings (NASDAQ: DKNG) have been barely down following better-than-expected earnings outcomes for the primary quarter. The sports betting firm’s income and adjusted working revenue beat the Avenue’s consensus, and administration expects extra wonderful outcomes for the complete yr.
Benchmark Co. analysts maintained a purchase ranking on the shares however raised the price target from $50 to $52, reflecting the upbeat earnings report.
Why purchase DraftKings inventory
The legalization and adoption of on-line playing and sports activities betting continues to play out, as DraftKings launched its on-line sportsbook in Vermont and North Carolina within the first quarter. New buyer acquisitions helped drive income up 53% yr over yr to over $1.1 billion.
The excessive income progress can also be beginning to drive upside to profitability. DraftKings’ working loss considerably narrowed from $389 million within the year-ago quarter to $138 million.
Administration raised full-year steering for income and adjusted EBITDA (earnings earlier than curiosity, taxes, depreciation, and amortization). The corporate’s skill to effectively leverage bills to develop profitability is one purpose the inventory might hit new highs this yr.
What’s the inventory’s upside?
The inventory traded barely down on Friday following the earnings replace, which in all probability displays an already costly valuation, as famous by the inventory’s forward price-to-earnings (P/E) ratio of 95.
Nonetheless, the consensus Wall Avenue estimate has DraftKings’ earnings reaching $2.29 in 2026. Even when the inventory’s ahead P/E drops to 50, that will put the share worth at $112, or greater than double the present quote.
Assuming DraftKings continues to indicate margin enchancment, the inventory might transfer greater this yr and surpass the $52 worth goal on the best way to a lot larger positive factors over the following few years.
Must you make investments $1,000 in DraftKings proper now?
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John Ballard has no place in any of the shares talked about. The Motley Idiot has no place in any of the shares talked about. The Motley Idiot has a disclosure policy.
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