What the Recent Rating Bumps Mean for DraftKings Stock

DKNG stock - What the Recent Rating Bumps Mean for DraftKings Stock

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iGaming giant DraftKings (NASDAQ:DKNG) had its stock rating upgraded from a “sell” to a “hold” by Zacks Investment Research, suggesting an end to its price plunge.

DKNG stock has taken a hammering in the past few months as investors turned away from riskier investments. DKNG stock has been more volatile over the past three months than the overall market. Its daily price fluctuations came in higher than 99% of S&P 500 index firms.

However, a rating bump from a reputable research firm, such as Zacks, points to better pastures ahead for DraftKings investors. Similarly, Needham & Company LLC set a “buy” rating on the stock. Moreover, Refinitiv analysts have also put a “buy” rating on the stock and a mean price target of $33.40. That represents over 100% upside from current levels.

DraftKings has been on a roll as of late, expanding into new states and rapidly growing its top line. It held an investor conference recently where its management laid down the path to profitability by the fourth quarter of next year. Hence, investors have a benchmark for gauging its performance.

Furthermore, the management talked about improving unit economics in newer states. Moreover, the company’s total addressable market has grown from $67 billion to $80 billion with the addition of new states.

With the recent pullback, DKNG stock now trades at more attractive multiples. Nevertheless, it is imperative to consider that the stock is still unprofitable. Additionally, a lot depends on state legalization, which is likely to impact sales estimates and the overall market sentiment. Therefore, DKNG is a relatively risky bet, ideal for those with a long-term horizon for the stock.

On the date of publication, Muslim Farooque did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines

Muslim Farooque is a keen investor and an optimist at heart. A life-long gamer and tech enthusiast, he has a particular affinity for analyzing technology stocks. Muslim holds a bachelor’s of science degree in applied accounting from Oxford Brookes University.

Article printed from InvestorPlace Media, https://investorplace.com/2022/04/what-the-recent-rating-bumps-mean-for-dkng-stock/.

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