UPDATE: DraftKings Inc. (DKNG) PT Lowered to $50 at Benchmark
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Benchmark analyst Mike Hickey lowered the price target on DraftKings Inc. (NASDAQ: DKNG) to $50.00 (from $70.00) while maintaining a Buy rating.
The analyst comments "We have rationalized our DKNG valuation target multiple, observant of a broader market trend in high growth and gaming stocks. We suspect the market is effectively pricing concerns over the Omicron coronavirus variant and potential influence on the economy and sports, an inflation impact on economic growth and consumer discretionary spend, and a recent hawkish pivot from the Federal Reserve that includes an accelerated view on interest rate increases, which can have an exaggerated impact on high multiple growth companies. DKNG share price has fallen meaningfully, down 42% over the last 3-months. We remain attentive to the potential impact from the Omicron coronavirus variant as we wait on further data to understand transmissibility, virulence, and resistance to vaccines. We are reminiscent of the initial virus influence in FY20, that delivered a meaningful increase in user engagement, accelerated new betting opportunities including esports, and was a catalyst for positive regulatory momentum toward the state(s) legalization of online sports betting and online casino. We have reduced our FY21 AEBITDA expectation to account for anticipated incremental marketing spend toward opening operations in new states including Arizona and Connecticut."
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