Shares of online sports-betting firm DraftKings (ticker: DKNG) experienced a 2.6% surge on Tuesday, reaching $32.46 per share. This marks the highest closing price for DraftKings since December 2021, as reported by Dow Jones Market Data.
In a recent development, Truist analyst Barry Jonas upgraded DraftKings stock from Hold to Buy and also raised the price target from $31 to $44. The decision was influenced by the company’s impressive second-quarter results and raised guidance, which were announced earlier this month. Additionally, Jonas highlighted DraftKings’ clear path to profitability as a key factor contributing to the bullish stance.
According to Jonas’ research report, “DKNG may be the best top-line story in gaming today, a space otherwise plagued (whether right or wrong) by macro concerns.” He further emphasized that “the path to significant and sustainable profitability has become clearer.”
DraftKings reported exceptional second-quarter earnings before interest, taxes, depreciation, and amortization (EBITDA) of $73 million on August 4. This figure substantially exceeded Wall Street’s expectations of $20.6 million and showed significant growth compared to the $118 million loss recorded in the same period last year.
Since the beginning of 2023, DraftKings stock has experienced a remarkable surge of 178%, effectively erasing a 59% drop witnessed in 2022.
In his research report, Jonas outlined the key changes to their initial thesis and stated, “The main changes to our initial Hold thesis have been: a more rational promo and marketing environment coming sooner than we initially expected, DKNG and FanDuel seeing continued market share gains while DKNG appears to be narrowing the gap with FanDuel, and structural hold improvements with the customer base moving more to parlays.”
As the company continues to thrive, investors are eagerly keeping an eye on DraftKings.