DraftKings Earnings Preview: A Smart Investment Opportunity?

Draftkings stock price

Key points

  • DraftKings analysts are raising their targets, but the bar is still low; the expectation is outperformance.
  • Record-breaking sports betting during March Madness and newly opened territories like North Carolina will provide strength.
  • Analysts are raising ratings and price targets ahead of May’s earnings release, leading the market higher.
  • 5 Stocks We Like Best Than DraftKings

DraftKings NASDAQ: DKNG it’s a good bet ahead of fiscal first-quarter earnings because analysts are underestimating its growth and tailwinds are pushing the business to record levels. The next release is expected in early May and analysts have mostly revised higher but left it low. As it stands, consensus estimates reported by Marketbeat.com call for a seasonal sequential decline in revenue and slowing year-over-year growth that doesn’t take into account March Madness and the opening of its sportsbook to North Carolina residents.

March Madness is one of the top five sporting events to bet on in 2024 and is expected to generate record revenue. Sportsbooks like DraftKings will also significantly improve their hold rates with the growing popularity of in-game betting and parlays, which combine multiple selections into a single bet, increasing the stakes and risk.

As for NC, North Carolina opened its borders to online gambling this year, with sites like DraftKings going live just before the start of the NCAA Tournament. This is significant because North Carolina is a top-six market for sports betting and has two cities in WalletHub’s ranking of the best cities for basketball fans. We love our basketball and the rivalries run deep.

Initial channel checks by GeoComply showed more than 5.25 million geolocation checks by NC in the first 48 hours of live sports betting, a solid figure for a state with about 11 million residents.

DraftKings analysts are raising their sights and leading the market

Analysts are bullish on DraftKings, leading the market higher through revisions to sentiment and price targets. Over the past twelve months sentiment has risen to the level of moderate buy from hold and is approaching strong buy. The consensus price target continues to lag the share price, but is up 100% over the past year, with all new targets above it. The five revisions tracked by Marketbeat.com in March have targets ranging from $52 to $58, suitable for a gain of 6% to 18%.

The most recent is Barclays New York Stock Exchange: BCS, which moved from Equal Weight to Overweight with a $50 price target. In their view, the company still has significant growth ahead of it because the addressable market is larger than initially expected. Mature states also have some advantages and will contribute to long-term margin expansion. Assuming the first quarter release and outlook are as strong as expected, upward revisions and upgrades should continue through mid-year.

Insider selling isn’t a problem for DraftKings: Institutions are buying

DraftKings Insiders have been selling shares in recent quarters and their activity has increased, but that’s not a concern for investors. Insiders and major shareholders have sold only small amounts as the shares have risen, and they still own more than 55% of the shares. The selling will likely continue due to the rising stock price, but is unlikely to change the price trajectory on its own.

Institutional activity is accelerating and the bottom line for this consumer tech stock is bullish. Institutional holders own around 40% of the shares, and ownership is extensive, with over nine hundred organizations invested in it and buying activity on the rise. The largest holders are Black rock NYSE: BLACK and Vanguard, with about 13.5% net, followed by ARK Investment Management, with 1.5%.

DraftKings is in an uptrend and can recover higher

DraftKings stock price is in an uptrend and can go higher. However, the next hurdle is just above the current stock and could limit gains until the first quarter report is released. In this scenario, price action could move sideways within the current $40 to $50 range, and a move lower is a likely entry point. If the market can sustain the bullish momentum, it could advance into the $50 to $60 range before May.

DraftKings stock chart

Before you consider DraftKings, you’ll want to hear it out.

MarketBeat tracks Wall Street’s highest-rated and best-performing research analysts and the stocks they recommend to their clients on a daily basis. MarketBeat identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market takes hold… and DraftKings wasn’t on the list.

While DraftKings currently has a “Moderate Buy” rating among analysts, top-rated analysts believe these five stocks are better buys.

View the five stocks here

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