DraftKings (NASDAQ:DKNG) rose for a second straight session after impressing analysts with its Q2 earnings report and guidance lift.
Morgan Stanley (Overweight rating, price target $30) reiterated a bullish view on DKNG. Analyst Ed Young and team continue to believe DKNG is executing on its plan of narrowing EBITDA losses and moving towards profitability as more states are added to the revenue mix and mature.
Jefferies (Buy rating, price target $33) thinks the better-than-expected quarter and guidance raise is consistent with prior periods. Analyst David Katz and team see further upside based on the benign promotional environment, growing Street acceptance that management would not have to raise capital for a few years out, and shifting market context in accepting risk.
Meanwhile, Needham (Buy rating, price target $25) likes the setup on DKNG ahead of the football season. "We are encouraged by the unit economics of the business, in particular, with management indicating sales and marketing expense was down YoY for states launched more than a year, helped by efficiencies and a lighter sports calendar," updated analyst Bernie McTernan. "DKNG continues to add product capabilities supporting a higher mix of parlays which we believe sets them up well for the upcoming NFL season," he added.
CBRE Equity Research (Hold rating, price target $18) is more cautious. Analyst John DeCree said the moderately improved EBITDA guidance and liquidity profile leaves the firm a bit more confident in DKNG's ability to make it through FY23 and to profitability without potentially unfavorable capital markets activity. However, he maintained that an additional capital could be prudent.
Shares of DKNG rose 2.39% to $18.39. The stock is above its 50-day and 100-day moving averages, but still sits about 18% below the 200-day moving average.