It has been a volatile ride for investors of DraftKings (DKNG). Since closing at an all-time high of $63.78 on October 2, the share price has dropped by 32%. However, the stock is showing signs of upward movement, as good news is once again taking hold of the narrative.
The presidential election results might still be at an impasse, but election night handed a 3-0 victory to the sports betting sector. Maryland, Louisiana, and South Dakota all voted to approve legalized sports betting in 2021.
Oppenheimer analyst Jed Kelly is in no doubt as to what it means for the fledgling industry.
“We view this as a positive for DKNG and the industry as whole in signifying the public’s large appetite for legalized sports betting,” the analyst said.
Kelly believes Maryland is most likely to be the first to implement mobile sports betting as early as next year. “Our view is largely based on the state sharing borders with PA, DC, and VA, which all already have or will have live mobile betting in early 2021,” he said.
In the first year, Kelly estimates Maryland sports betting could generate revenue of $185 million – amounting to 62% of New Jersey’s first full year.
Louisiana and South Dakota are less likely to hop on board with mobile betting so soon. Kelly expects sports betting “in a retail capacity” to kick off both in LA and SD sometime next year but mobile sports betting’s “immediate legalization” in Louisiana is less certain.
Likewise in SD, where a “large tribal presence and the conservative nature of the state” make estimating when mobile betting will go live a difficult task.
Overall, there’s no change to Kelly’s DKNG rating which stays an Outperform (i.e. Buy). Kelly has a $65 price target for the shares, implying 51% upside from current levels. (To watch Kelly’s track record, click here)
Most Street analysts back Kelly’s call. Based on 13 Buys and 6 Holds, the stock qualifies with a Moderate Buy consensus rating. Given the $58.06 average price target, the analysts expect shares to change hands for a 35% premium over the next 12 months. (See DraftKings stock analysis on TipRanks)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.