DraftKings is Begging to Breakout as Gambling Legalizations Increase

DraftKings is set to report earnings February 26, and an analyst at Benchmark has raised his bar.

Analyst Mike Hickey upped his target for DraftKings stock [$DKNG] to $66 from $60 in a note on Sunday. He has a Buy rating on the stock, and thinks the company will deliver a strong performance during its fiscal Q4, while boosting expectations for the year to come.

DraftKings stock is up 2.2% since it went public via a merger with a SPAC in April. Though sports halted early in pandy, the company has swelled its offerings in the states that have legalized online sports betting. After sports came back over the summer, more-developed markets like New Jersey saw record monthly online sports betting in the fall.

“The online sports betting and online casino markets have demonstrated remarkable growth,” Hickey wrote.

Analysts have blamed budget shortfalls as a spark that could lead more states to allow online sports betting to help plug budget gaps amid the pandy. “Regulatory momentum has been extremely encouraging and we anticipate revenue step up catalysts from ongoing state legalization,” Hickey writes. “DKNG should extend market share leadership from brand awareness and player acquisition investments.”

For the fiscal Q4, Hickey foresees revenue of $222 million, compared to consensus estimates of around $232 million. Looking beyond, he predicts revenue of $843 million in the 2021 fiscal year.