Attention should surely be paid to any stock that has double-digit upside potential. That's very much the situation with online and mobile sports betting platform operator DraftKings (DKNG -2.81%).
At least, that's the take from one analyst following the stock, who feels that its price could climb 46% over the next year or so. Here's why he thinks the company is well worth a wager.
DraftKings has real upside potential
Oppenheimer's Jed Kelly has been quite the DraftKing bull for some time now, and this month he reiterated his sunny stance on the company. He very much rates it a buy at a price target of $60 per share, quite some height above its present level of just above $41.
Kelly felt compelled to write a new research note on the gaming company's stock, as it has slid by more than 16% from the 52-week high it reached in late March. He opined that the current softness is due to "mostly optical" factors, including some political rhetoric against gambling legalization (this is an election year, after all). Kelly stated that, meanwhile, "structural fundamentals around player engagement/retention, product, and advertising efficacy remain[s] intact." So for him, the stock is a highly attractive buy on weakness just now.
No sure bet
There's no denying that legalized gambling has a bright future, despite the occasional politician railing against it and the numerous competitors eager to increase market share.
Is DraftKings an ideal play on that future, though? I'm not yet convinced. Yes, top-line growth indicates the company's doing a fine job capitalizing on its opportunity, but it has yet to prove it can book a net profit with any consistency. Meanwhile, there remains plenty of resistance to legalization throughout this country, so the company could continue to play at a handicap for quite some time. Me, I'd sit on the sidelines with DraftKings stock.
