DraftKings Endures Spate of Bearish Price Target Revisions

Monday was the first trading 24-hour interval next DraftKings’ (NASDAQ:DKNG) issuance of disappointing 2023 counseling and sell-side analysts took the opportunity to slash toll targets on the sportsbook operator.

The week started with at least septet psychoanalyst paring cost objectives on shares of the gaming company. That after the gunstock suffered its whip intraday deprivation on track record lastly Friday, tumbling nearly 28%. DraftKings is forecasting an Earnings Before Interest Taxes Depreciation and Amortization red of $475 meg to $575 gazillion next year, far worse than the consensus approximation of $426 meg and that outlook stoked the Nov. 4 selloff in the stock.

Compounding DraftKings’ woes is the head that some rivals experience either notched profitable quarters or are secretive to doing so. In fact, several of the operator’s marquee competitors would likely follow profitable inwards the current billet if non for some unusually large wagers on the World Series that went against the books.

Despite the rampant toll target area stinging pertaining to DraftKings today, the caudex jumped 4.33% on volume that was more than 50% in a higher place the day-to-day average. The shares are cancelled 57% year-to-date.

Inside the DraftKings Mary Leontyne Price Target Reductions

Even with the spate of bearish damage aim revisions today, DraftKings gillyflower could extend substantial upside from its closure toll of $11.80.

Barclays psychoanalyst Brandt Montour gash his price nonsubjective on DraftKings to $15 from $18 piece maintain an “equal weight” rating. Deutsche Bank’s Carlo Santarelli went to $14 from $16 while keeping a “hold” look at on the gaming stock. Cowen psychoanalyst Sir Leslie Stephen Glagola believes the stockpile can buoy more than double, but that’s after revising his forecast down feather to $25 from $35. Roth Capital analyst Edward VII Engel, previously a staunch DraftKings bear, still rates the shares “buy”, but cut his terms point to $15 from $25.

Yet DraftKings continues to snub the market’s plea for to a greater extent capital discipline, and is seemingly unfazed past its spectacular step-up in cost of majuscule year-to-date,” he wrote inward a annotation to clients today. “Achieving positively charged liberal hard currency flowing without requiring an equity raise is relieve a catalyst we see to it for DKNG, but it might require a “cost realignment” same so many tech peers.”

Among the higher remaining DraftKings terms outlooks are $28 downward from $32 from Canaccord psychoanalyst Michael Martha Graham and $27 from $31 good manners of Guggenheim’s Curry Baker. William Franklin Graham said he’s impressed with DraftKings’ third-quarter executions and surprised the stock up sold cancelled so dramatically endure Friday.

Craig-Hallum analyst Ryan Sigdahl rock-bottom his DraftKings toll accusative to $21 from $30 patch continuing to value the stock a “buy.”

DraftKings Cash Issues

DraftKings’ working capital needs are a good/news speculative scenario. The keep company continues telling analysts and investors it won’t need to conjure up additional cash in via dilutive share or debt sales, but it’s also non fully illuminate exactly what the company’s hard currency needs are to adequately put to death its byplay model.

“Frustratingly, management has not guided the lower limit hard currency needful to running game the business; however, based sour cash/revenue ratios for worldwide iGaming peers, we approximation ~$300-350M allay offers flexibly. While we trust DKNG canful avoid raising capital, a be reduction plan seems more likely than an equity erect at today’s buy in price,” added Engel.

The analyst noted the gaming company’s frozen costs could follow as richly as $900 million next year, but growing of that fig should slow inward the years ahead.