On Monday, Susquehanna maintained a positive outlook on DraftKings Inc. (NASDAQ: NASDAQ:DKNG), raising the price target to $56 from the previous $54. The revision comes ahead of the company's first-quarter earnings report scheduled for this Thursday after the market closes.
The firm has increased its Q1 2024 consolidated revenue projection for DraftKings to $1.17 billion, indicating a year-over-year growth of 52%, which is 5% higher than the prior estimate of $1.118 billion.
The updated revenue forecast aligns closely with the guidance provided by DraftKings. Additionally, Susquehanna anticipates an EBITDA of $25 million for the quarter, a significant improvement from the earlier break-even expectation. This adjustment is attributed to an analysis revealing reduced promotional spending in DraftKings' core online sports betting and iCasino segment, which constitutes roughly 91% of the company's consolidated revenue.
Susquehanna also noted DraftKings' stock volatility around earnings, with an option implied move of approximately +/- 10% following the release. This is set against the backdrop of the company's implied volatility over the past three months, with DraftKings' year-to-date performance showing a 22% increase.
This growth is nearly four times that of the Nasdaq index and is comparable to the returns of major tech companies like META (NASDAQ:META) and GOOGL, while also outperforming Flutter Entertainment (LON:FLTRF)'s 7% gain.
With Flutter Entertainment's primary U.S. listing approaching in late May, Susquehanna expects investors to draw more comparisons between DraftKings and Flutter moving forward. The firm reiterated its positive stance on DraftKings, citing the higher revenue and EBITDA estimates as the basis for the increased price target.
InvestingPro Insights
As DraftKings Inc. (NASDAQ: DKNG) approaches its first-quarter earnings report, investors are keenly watching the company's financial health and market performance. The recent price target increase by Susquehanna reflects optimism, which is supported by some compelling data from InvestingPro. DraftKings' market capitalization stands at a robust 20.52 billion USD, demonstrating the company's significant presence in the market. Despite not being profitable over the last twelve months, with a P/E ratio of -24.79, analysts are expecting net income growth this year. This anticipated turnaround is likely factored into the positive sentiment around the stock.
Furthermore, DraftKings has shown a remarkable revenue growth of 63.6% over the last twelve months as of Q4 2023, with the quarterly figure even higher at 43.94%. This indicates a strong upward trajectory in the company's sales, which aligns with Susquehanna's raised revenue projections. The InvestingPro Tips also highlight that analysts anticipate sales growth in the current year, reinforcing the bullish outlook. Additionally, the stock has experienced a substantial price uptick of 61.9% over the last six months, underscoring the market's confidence in DraftKings' performance.
For investors looking to delve deeper into DraftKings' investment profile, there are additional InvestingPro Tips available that can provide further insights into the company's valuation multiples and debt levels. To access these tips and enhance your investment strategy, consider using the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription at InvestingPro.
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