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UBS raises DraftKings shares target on strong Q1 earnings

EditorEmilio Ghigini
Published 05/15/2024, 05:30 AM

On Wednesday, UBS updated its financial outlook for DraftKings Inc. (NASDAQ:DKNG) shares, increasing the price target to $60 from the previous $56 while maintaining a Buy rating. This adjustment follows DraftKings' release of its first-quarter earnings, which surpassed expectations.

DraftKings' recent financial results demonstrated an improved structural hold and unit economics within its existing operations. The positive performance in the first quarter prompted the revision of the price target. UBS continues to apply a 22-24x two-year forward EV/EBITDA multiple to its 2026 estimates to determine the value of DraftKings.

The sports betting company's better-than-expected quarterly outcomes have reinforced confidence in its growth trajectory. UBS's valuation method, which relies on a forward-looking EV/EBITDA multiple, reflects an anticipation of DraftKings' continued business expansion and financial health.

The increase in the price target to $60 reflects a bullish outlook for DraftKings' stock, suggesting a potential upside from its current trading level. Investors may view this as a positive signal for the stock's future performance.

InvestingPro Insights

As DraftKings Inc. (NASDAQ:DKNG) continues to outperform market expectations, a closer look at the InvestingPro data and tips may offer additional insights for investors. With a market capitalization of $21.02 billion, DraftKings showcases significant growth potential as reflected by a robust revenue increase of 57% over the last twelve months as of Q1 2024. The company's revenue growth is further complemented by a gross profit margin of 39.06%, signaling efficient operations and strong market demand.

InvestingPro Tips highlight that analysts are optimistic about DraftKings' future, expecting net income and sales growth in the current year. Additionally, four analysts have revised their earnings upwards for the upcoming period, indicating a positive outlook on the company's profitability. While the stock is known for its volatility, it has delivered a high return of 87.87% over the past year, demonstrating its potential for rewarding investors who are willing to navigate the risks associated with its dynamic price movements.

For those interested in a deeper analysis, InvestingPro provides additional tips on DraftKings, including its moderate level of debt and the anticipation of the company becoming profitable this year. To access these insights and more, visit https://www.investing.com/pro/DKNG and consider using the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription. With 12 more InvestingPro Tips available, investors can gain a comprehensive understanding of DraftKings' financial health and market position.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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