Guggenheim Starts DraftKings Inc. (DKNG) at Buy; Sees $76bn+ North American TAM
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(Updated - April 30, 2021 6:22 AM EDT)
Guggenheim analyst Curry Baker initiates coverage on DraftKings Inc. (NASDAQ: DKNG) with a Buy rating and a price target of $75.00.
The analyst commented, "We are initiating coverage of DraftKings with a BUY rating and $75 price target. Our PT is based off a blended DCF ($80 using 8.3% WACC, 4.0% L-T growth rate) and forward Price to Sales multiple ($70 using a 27.5x 2021 sales multiple). We believe DraftKings is well positioned to capture a significant share of the rapidly growing North American Online Sports Betting (OSB) and iGaming markets. Our analysis points to a L-T NA revenue opportunity (OSB, iGaming) of $7.6-10.6bn (at EBITDA margins in excess of 30%). Beyond the momentum towards legalization and the inherent tailwinds new states/markets offer, we see several other competitive advantages underpinning our positive outlook for DraftKings: a premier sports gaming brand, a market leading position in OSB and iGaming already, a flexible proprietary technology platform that is scalable and vertically-integrated, and plenty of financial firepower to fund future growth."
Shares of DraftKings Inc. closed at $56.52 yesterday.
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