DraftKings picks up another upgrade as its stock gets slammed on ESPN threat
While bullish DraftKings DKNG upgrades earlier this week focused on the company’s profit potential, JPMorgan’s Joseph Greff moved to a neutral stance late Tuesday in light of pressure on DraftKings shares due to new competitive developments in the online-sports-betting industry.
As Greff lifted his rating from underweight to neutral, he said he was taking advantage of a 10% after-hours selloff following rival Penn Entertainment Inc.’s PENN plans to partner with Walt Disney Co.’s DIS ESPN and rebrand its sportsbook as ESPN Bet.
neutral rating is more appropriate than an underweight one,” he wrote. “Still, the valuation is expensive,” at 18.2 times 2025 estimates for enterprise value to earnings before interest, taxes, depreciation and amortization , making it “tough for us to find a reason to see more for upside from current levels.”
Meanwhile, Wells Fargo’s Daniel Politzer, one of the analysts who turned bullish on DraftKings shares earlier in the week, saw the potential for the company to recognize an Ebitda boost in the second half of 2023 as it presumably winds down prior semi-exclusive marketing deals with ESPN. This could be “potentially offset by higher promos to combat what we’d assume will be a blitz from ESPN Bet,” however.“We suspect ‘long-time’ users are somewhat entrenched with DraftKings at this point in time given their strong experience with the product,” he wrote, while maintaining an overweight rating. “Overall, we continue to view DraftKings as an industry leader, with scale and product advantages relative to other players.
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