DraftKings (ticker: DKNG) can anticipate further growth in its stock value as it maintains an attractive business model, placing the company in a favorable competitive position, according to an analysis by J.P. Morgan.
Joseph Greff, an analyst at J.P. Morgan, has upgraded DraftKings shares from Neutral to Overweight. He has also established a year-end 2024 price target of $37 for the stock, replacing the previous year-end 2023 target of $26.
Greff's research note, released on Tuesday, highlights his intention to capitalize on the stock's recent sluggish performance. Since July 27, the shares have experienced a 15% decline.
The gambling industry is currently experiencing significant appeal, with promising growth prospects in both established and emerging markets. While operating expenses are improving throughout the industry, DraftKings possesses a strong competitive advantage due to its product quality, scale and brand recognition. This allows the company to effectively compete against new entrants, such as PENN's ESPNBet and Fanatics, similar to how it successfully competed against Caesars.
This upgrade follows a remarkable 140% surge in the stock's value this year. Additionally, on Aug 4., DraftKings reported a second-quarter revenue of $875 million, reflecting an 88% increase from the previous year's figures.
In premarket trading on Tuesday, DraftKings shares were already showing a positive gain of 3.1% and reached $28.22.
Conclusion
Analyst Joseph Greff predicts that DraftKings' stock will continue its upward trajectory due to the company's strategic business model and strong competitive position. With favorable market conditions and impressive revenue growth, DraftKings remains a promising investment opportunity.
