Tuesday October 12, 2021 |
DraftKings Inventory Tagged with Scarce Offer Score By Roth Capital
Posted on: Oct 12, 2021, 09:17h.
Final updated on: Oct 12, 2021, 10:30h.
Wall Road analysts are broadly bullish on DraftKings (NASDAQ:DKNG) inventory. But Roth Capital’s Edward Engel is amid the dissenting voices.
In new coverage of many gaming names today, the analyst tags DraftKings with a “sell” ranking and a $41 selling price goal. That implies downside of about 16 % from the Oct. 11 near. Engel’s get in touch with arrives as shares of the online sportsbook operator are off 21.74 % about the past month.
The analyst’s bearish view on DraftKings revolves all over two principal details: The significantly competitive nature of the domestic athletics wagering landscape, and waning added benefits from converting daily fantasy sports activities (DFS) customers into sporting activities betting purchasers.
We really don’t think DraftKings’ 20 percent to 25 percent market share is sustainable, as mid-tier peers ramp consumer acquisition and greater cross-promote land-based mostly databases,” stated the analyst. “While we think an business-primary solution creates some industry share rewards, we see benefits from DFS fading above time and DraftKings dropping market place share, specially in iGaming.”
Prior to Engel’s get in touch with, 26 analysts included DraftKings — 18 of which have bullish or pretty bullish scores on the stock. His value forecast is effectively under the Wall Street normal of $70.11.
DraftKings, Other Big Gamers Vulnerable to Level of competition
FanDuel, BetMGM and DraftKings – the best three on-line sportsbook operators in the US — get pleasure from enviable brand recognition. But Engel thinks the marketplace is ripe for other gamers to attain marketplace share.
“While we’re bullish on US on line gaming, we do not consider 70 per cent market share for the three leaders (FanDuel, BetMGM, DraftKings) is sustainable, and see DraftKings conceding sector share as mid-tier operators ramp buyer acquisition and much better cross-sell legacy casino consumers,” stated the analyst.
Just one of the contenders that could pilfer marketplace share from the big a few is Penn National Gaming (NASDAQ:PENN), which operates the Barstool Sportsbook. Penn doesn’t devote as considerably on advertising and consumer acquisition as its aforementioned rivals do. Alternatively, it leverages Barstool Athletics personalities and its founded media footprint to create sporting activities wagering company while it is making use of its myChoice shopper loyalty plan to bolster its on-line casino sector share.
“We believe Barstool and myChoice offer you the most productive and complementary buyer acquisition channels in On-line Gaming. Though buyers are involved with Penn’s ability to carry On the net Sporting activities Betting technological know-how in-household, we see an possibility to adapt a hybrid design the place Penn leverages an evolving ecosystem of really specialized threat and trading functions from rising 3rd-get together B2B provider vendors,” said Engel.
The analyst has a $107 value concentrate on on Penn, implying 40 p.c upside from the Oct. 11 close. Penn is also pulling enlargement levers. In August, the operator explained it’s shelling out $2 billion in income and equity to purchase Canada’s Rating Media and Gaming (NASDAQ:SCR). Last thirty day period, it uncovered a 6.27 % stake in Australia’s PointsBet (OTC:PBTHF).
Bullish on Hurry Avenue Interactive, Too
Another name Roth’s Engel likes in the iGaming place is Hurry Avenue Interactive (NYSE:RSI).
The analyst phone calls RSI the most eye-catching option in the domestic business enterprise-to-buyer internet gaming arena. He charges RSI a “buy” with a $24 price tag forecast. Which is about 20 percent higher than exactly where the shares closed on Monday.
The stock is on a torrid tempo, soaring more than 80 per cent over the previous 90 days as speculation intensifies it is a takeover focus on.