This sports betting stock could rally up to 40%: Piper Sandler

DraftKings Inc (NASDAQ: DKNG) has been a pain for its shareholders this year but a Piper Sandler analyst says it’ll be a different story for those who buy it here.

DraftKings stock could be worth $21

According to Matt Farrell, now is a suitable time to invest in this stock as it has upside to $21. That represents a 40% premium on its current price.

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He expects DraftKings to benefit as more and more states continue to legalise sports betting. Farrell’s constructive view is also based on revised guidance that reiterates the company’s commitment to profitability.

With profitability expectations reset after the initial 2023 guide, we believe current levels represent an attractive long-term entry point, particularly with the risk of a future capital raise largely diminished.

Earlier this month, the Nasdaq-listed firm said it expects to significantly contract its adjusted EBITDA loss to about $525 million [give or take $50 million] in 2023 (read more).

DraftKings to go live in Maryland next week

DraftKings is slated to launch its online sportsbook in Maryland on the coming Wednesday – just in time to benefit from the NFL games on Thanksgiving and the month-long soccer World Cup. That also fed into Farrell’s “overweight” rating on the stock.   

The sports betting company has been aggressively investing in “social, media, and rewards” that will help with engagement and retention, he added.

DraftKings is consistently one of the top three operators across majority of the states it is live, with these major players typically controlling ~80% of the share. We believe DraftKings will continue to be a share gainer over time.

This Boston-headquartered firm has an $80 billion TAM (total addressable market) in the U.S. and Canada combined. DraftKings stock is particularly attractive from the valuation perspective, down about 45% year-to-date.