Online sports betting firm DraftKings (NASDAQ:DKNG) recently posted its latest earnings report. Some elements proved disappointing, but others were sufficient to prompt recovery in premarket trading as trading volumes reached levels that were nearly double those normally seen. Losses turned out to be substantial, but improved greatly following adjustments. The company also offered up a positive outlook going into the next quarter, sufficient to keep the gains seen overnight going into trading this morning. Finally, an overwhelmingly positive analyst picture should further spur investor interest.
Lower Losses, Higher Highs
DraftKings' earnings report proved to be a mixed bag, with the company turning in a loss of $0.87 per share, though when adjusted, it came out to just $0.36 per share. Given that analysts at FactSet were expecting an adjusted loss of $0.43, this still comes out to be a lower loss than expected. However, at the same time last year, the company reported a loss of $0.37 per share outright.
Revenue offered a much brighter picture. DraftKings' revenue for the latest quarter came in at $312.3 million, which not only beat expectations of $236.2 million from analysts, but also destroyed revenue from a year prior. DraftKings' revenue was up 252.6% against this time last year.
Several of the company's other key metrics delivered value as well. The company revealed that monthly unique player counts had more than doubled, up 114% to a total of 1.5 million. That compares wonderfully to the expected 1.19 million posed by analysts.
DraftKings also offered up positive guidance, hiking its full-year 2021 guidance from the previous figure of between $900 million and $1 billion to between $1.05 billion and $1.15 billion. Analysts were already expecting better out of DraftKings, looking for $1.05 billion in revenue for the year. Now, DraftKings looks to at least meet that figure if not exceed it, which is excellent news.
The company cited a combination of factors for its success, starting with improving numbers in customer acquisition as well as improving customer retention. The increased legalization of mobile sports betting and similar online gambling actions in new states is improving things still further. Reports noted that an additional 50 million people were allowed to place bets on the Super Bowl this year thanks to increased legalization, and further reports noted that 80% of the $500 million in wagers placed on the big game were placed online, suggesting an excellent recurring revenue stream for DraftKings afoot.
What Are Financial Analysts Saying About DKNG Stock?
Over the last year, online betting has exploded into a range of new markets thanks in large part to states legalizing the services. This has brought a matching rise in bullish sentiment from financial analysts, as our latest research finds.
A year ago, DKNG stock had four “buy” ratings to its credit. While it's added some bearish sentiment since, the number of analysts urging investors buy in has skyrocketed. Today, the company has 22 “buy” ratings along with five “hold” and one “sell.”
Meanwhile, price targets occupy a broad range. The current average DraftKings stock price target is $67.18, with a high of $100 and a low of $35. That low traces back to last May, with Cannonball Research posting $35, while the $100 high goes back to November, held by Loop Capital.
Recent coverage of the company has been very positive overall. Just this month so far, both Guggenheim and Needham & Co. have initiated coverage, both posting “buy” recommendations. Guggenheim has a price target of $75 and Needham currently holds $81.
That's just for starters, too; the same day Guggenheim and Needham & Co. initiated coverage, Cowen upgraded the stock from “market perform” to “outperform.” Prior to that, in April, Oppenheimer started coverage with a “buy” rating and a $75 price target. In March, 12 analysts raised their price targets on DraftKings stock. Given DraftKings' current share price of $52.44 as of this writing, that suggests substantial upside potentially to come.
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