DraftKings' (DKNG) Results Provide 'Breadcrumbs' for Getting into the Green - Needham & Company
Needham & Company analyst Bernie McTernan reiterated a Buy rating and $46.00 price target on DraftKings Inc. (NASDAQ: DKNG) following results this morning. While the 2022 estimated losses are wider there are "breadcrumbs" for getting into the green, the analyst said.
The analyst commented, "
DKNG beat expectations in 4Q21 on revenue and narrower adj. EBITDA losses. Similar to past guidance updates, DKNG raised the revenue guidance for '22E but adj. EBITDA estimates for the street are heading lower. However, management did provide encouraging commentary on the outlook for profitability, including that all states that are currently live will be contribution margin profitable in '22 and assuming a normal cadence of new state launches, DKNG expects to be adj. EBITDA profitable in 4Q23E.
While 4Q'23E is still a long ways away and there are assumptions on market access between now and then, we think this tangible outlook for adj. EBITDA better helps frame the trajectory of adj. EBITDA losses improving. We note, we expect DKNG to be adj. EBITDA positive in '24E."
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Shares of DraftKings Inc. closed at $22.06 yesterday.