The website home screen for DraftKings
Gabby Jones/Bloomberg
DraftKings stock has a new bull, and he sees huge upside. Shares of the online-betting firm were rising on Tuesday.
Loop Capital Markets analyst Daniel Adam initiated coverage on DraftKings stock (ticker: DKNG) with a Buy rating and a $100 price target. That represents 127% upside from recent levels.
The company’s shares popped on Friday after it reported earnings and raised its outlook for 2020 revenue. Its forecast for revenue in 2021, at between $750 million and $850 million, also represents huge expectations for growth.
Adam wrote in a note on Monday that he sees online sports betting and iGaming, or online casino games, as the most significant growth drivers for the stock. He estimates that the total market for the two areas combined could be as large as $30 billion at maturity, far more than the consensus view of about $20 billion.
About 75% of U.S. states now have either legalized sports betting or have introduced legislation to do so, Adam noted.
He said DraftKings has a tremendous opportunity to grow in both existing and new markets. While New Jersey is among the most developed sports-betting markets, Adam believes it is far from mature, given the state only legalized sports betting two and a half years ago, The market is seeing huge year-to-date growth.
“We believe DKNG will emerge the clear share leader in online gaming given its powerful brand, early mover advantage and digital-first DNA,” he wrote.
DraftKings stock was up 4.3% to $44.72 on Tuesday morning, while the S&P 500 index was down 0.9%.
Write to Connor Smith at [email protected]
