Morgan Stanley Calls DraftKings Inc. (DKNG) a New Top Pick
Morgan Stanley analyst Ed Young reiterated an Overweight rating and $51.00 price target on DraftKings Inc. (NASDAQ: DKNG).
The analyst comments "Following Illinois' move to a higher/progressive tax structure, we give historical context for taxation in gaming as well as typical flow-through to margins. Bottom-line is tax increases do not translate 1:1 and should not be viewed as a foregone conclusion across markets. Add DKNG back to Top Pick. We add DKNG back as our Top Pick in North America Gaming & Lodging as we see positive catalysts alleviating recent pressure from the recent tax headlines: 1) capital return being announced on the 2Q release as FCF is still poised to inflect; and 2) reiterating guidance even with the headwind from IL, reflecting strong underlying market growth & a rational promotional environment. We also see limited-to-no new legislation this year acting as a soft catalyst, particularly if NJ does not include gaming taxes in its June budget. FLTRF remains our Top Pick in Europe Leisure & Hotels."
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Shares of DraftKings Inc. closed at $36.89 yesterday.