{"id":202332,"date":"2022-02-22T08:56:46","date_gmt":"2022-02-22T16:56:46","guid":{"rendered":"https:\/\/www.casino.org\/news\/?p=202332"},"modified":"2022-02-22T14:04:11","modified_gmt":"2022-02-22T22:04:11","slug":"at-least-eight-analysts-pare-draftkings-price-target","status":"publish","type":"post","link":"https:\/\/www.casino.org\/news\/at-least-eight-analysts-pare-draftkings-price-target\/","title":{"rendered":"DraftKings Endures Spate of Price Target Cuts"},"content":{"rendered":"

After shedding more than a quarter of its value last week, DraftKings (NASDAQ:DKNG) is dealing with more bad news today. At least eight Wall Street analysts are cutting price targets on the downtrodden sports betting stock.<\/p>\n

\"DraftKings
Staffers at DraftKings’ Boston office, seen above. At least eight analysts cut price targets on the stock today. (Image: CNBC<\/em>)<\/figcaption><\/figure>\n

Adding insult to injury, three of those price estimate revisions are at $19, implying only modest upside from the $18 handle at which the sports wagering equity currently resides. Today’s most dramatic DraftKings price outlook alteration comes courtesy of Wells Fargo analyst Daniel Politzer, who in downgrading the shares to \u201cequal weight\u201d from \u201coverweight,\u201d pares his price estimate to $19 from $41.<\/p>\n

We remain bullish on US digital gaming, but prefer Caesars Entertainment and Flutter Entertainment here; our downgrade is company specific and reflects our growing concern on DKNG\u2019s path to profitability, given its fast-growing operating expenses (as opposed to external marketing\/promotional spend, which have been a concern among investors),\u201d said the analyst in a note to clients.<\/p><\/blockquote>\n

Wall Street’s bearish view on DraftKings arrives after the stock tumbled more than 21 percent last Friday — a slide prompted by the sportsbook operator forecasting a wider-than-expected 2022<\/a> earnings before interest, taxes, depreciation and amortization (EBITDA) loss. Further irking investors are DraftKings’ costs, which Politzer notes will rise more rapidly this year than revenue.<\/p>\n

\u201cDKNG\u2019s implied 2022 [operational expense] will increase 60 percent year-over-year vs. its expected ~49 percent revenue growth,\u201d notes the analyst.<\/p>\n

DraftKings Insult to Injury<\/h2>\n

Heading into today, DraftKings already endured multiple price target cuts<\/a> this year, as analysts soured on high promotional spending and a lengthy road to profitability.<\/p>\n

\n

With so many analysts taking the ax to DraftKings price forecasts, the consensus estimate on the name is now $47.27, or more than two and a half times higher than where the stock currently resides. That means that in the span of a month, DraftKings’ price target fell by about $12. As recently as last October, the consensus estimate on the gaming name was close to $70.<\/p>\n<\/div>\n

Of the analysts trimming price outlooks on DraftKings today, only Politzer downgraded the stock, while three maintained the equivalent of \u201chold\u201d ratings on the shares.<\/p>\n

There’s one upgrade to speak of, as Roth Capital’s Edward Engel — long a DraftKings bear<\/a> — lifts his rating on the stock to \u201cneutral\u201d from \u201csell\u201d while reducing his price forecast to $19 from $23.<\/p>\n

Good News, Bad News<\/h2>\n

In a report to clients today, Engel praised DraftKings for increasing transparency, while noting the company’s 2022 revenue outlook doesn’t include the pending acquisition of Golden Nugget Online Gaming (NASDAQ:GNOG) nor does it reflect entries into Maryland, Ohio, and Ontario, Canada.<\/p>\n

\n

The analyst believes GNOG could add $100 million in revenue, while Maryland and Ontario could drive another $50 million to $100 million. However, he offers up some concerning tidbits, including that the operator \u201cis cutting it close with liquidity,\u201d and that a capital raise would be necessary to fund expansion into California, Texas, and Florida if those states legalize online sports betting (OSB).<\/p>\n<\/div>\n

\u201cWhile we believe DKNG can avoid raising equity before its converts mature in 2028, this would require enough EBITDA in 2026-27 to underwrite new debt (or for DKNG shares to rebound 300 percent+ to $70). That said, if California, Florida, or Texas were to legalize OSB before then, this would accelerate cash burn and likely require an equity raise,\u201d said Engel.<\/p>\n

DraftKings sold $1.3 billion in convertible debt<\/a> last year, and holders of those bonds have rights to convert to DraftKings equity at $70 a share in 2028.<\/p>\n","protected":false},"excerpt":{"rendered":"

After shedding more than a quarter of its value last week, DraftKings (NASDAQ:DKNG) is dealing with more bad news today. At least eight Wall Street analysts are cutting price targets on the downtrodden sports betting stock. Adding insult to injury, three of those price estimate revisions are at $19, implying only modest upside from the […]<\/p>\n","protected":false},"author":46,"featured_media":202333,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[10,1074],"tags":[],"acf":[],"yoast_head":"\nAt Least Eight Analysts Pare DraftKings Price Target<\/title>\n<meta name=\"description\" content=\"DraftKings deals with more grim news as at least eight sell-side analysts reduce price targets on the shares.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.casino.org\/news\/at-least-eight-analysts-pare-draftkings-price-target\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"At Least Eight Analysts Pare DraftKings Price Target\" \/>\n<meta property=\"og:description\" content=\"DraftKings deals with more grim news as at least eight sell-side analysts reduce price targets on the shares.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.casino.org\/news\/at-least-eight-analysts-pare-draftkings-price-target\/\" \/>\n<meta property=\"og:site_name\" content=\"Casino.org\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/Casino.OrgNews\" \/>\n<meta property=\"article:published_time\" content=\"2022-02-22T16:56:46+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2022-02-22T22:04:11+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/www.casino.org\/news\/wp-content\/uploads\/2022\/02\/DKNG-2-scaled.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"2560\" \/>\n\t<meta property=\"og:image:height\" content=\"1707\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"author\" content=\"Todd Shriber\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:creator\" content=\"@etfgodfather\" \/>\n<meta name=\"twitter:site\" content=\"@Casino_Org\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Todd Shriber\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"3 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"WebPage\",\"@id\":\"https:\/\/www.casino.org\/news\/at-least-eight-analysts-pare-draftkings-price-target\/\",\"url\":\"https:\/\/www.casino.org\/news\/at-least-eight-analysts-pare-draftkings-price-target\/\",\"name\":\"At Least Eight Analysts Pare DraftKings Price Target\",\"isPartOf\":{\"@id\":\"https:\/\/www.casino.org\/news\/#website\"},\"primaryImageOfPage\":{\"@id\":\"https:\/\/www.casino.org\/news\/at-least-eight-analysts-pare-draftkings-price-target\/#primaryimage\"},\"image\":{\"@id\":\"https:\/\/www.casino.org\/news\/at-least-eight-analysts-pare-draftkings-price-target\/#primaryimage\"},\"thumbnailUrl\":\"https:\/\/www.casino.org\/news\/wp-content\/uploads\/2022\/02\/DKNG-2-scaled.jpg\",\"datePublished\":\"2022-02-22T16:56:46+00:00\",\"dateModified\":\"2022-02-22T22:04:11+00:00\",\"author\":{\"@id\":\"https:\/\/www.casino.org\/news\/#\/schema\/person\/f4cecf70a5032bc4e60eb73fc86d4a85\"},\"description\":\"DraftKings deals with more grim news as at least eight sell-side analysts reduce price targets on the shares.\",\"breadcrumb\":{\"@id\":\"https:\/\/www.casino.org\/news\/at-least-eight-analysts-pare-draftkings-price-target\/#breadcrumb\"},\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"ReadAction\",\"target\":[\"https:\/\/www.casino.org\/news\/at-least-eight-analysts-pare-draftkings-price-target\/\"]}]},{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\/\/www.casino.org\/news\/at-least-eight-analysts-pare-draftkings-price-target\/#primaryimage\",\"url\":\"https:\/\/www.casino.org\/news\/wp-content\/uploads\/2022\/02\/DKNG-2-scaled.jpg\",\"contentUrl\":\"https:\/\/www.casino.org\/news\/wp-content\/uploads\/2022\/02\/DKNG-2-scaled.jpg\",\"width\":2560,\"height\":1707,\"caption\":\"Staffers at DraftKings' Boston office. 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