Argus has increased his rating on DraftKings (NASDAQ:DK) to Buy from Hold on Tuesday. The company expects favorable headwinds for the online sports betting industry from increased market share, more customer retention and earnings growth in existing markets. As more states legalize online sports betting and consumers allocating more of their income to betting, Argus expects DKNG’s revenue to grow to $3.1 billion in 2023 from $323 million in 2019
Analyst John Staszak updated: “Given DraftKings’ declining customer acquisition costs and the potential to grow at 20% or higher over the next few years, we’re confident in its long-term growth prospects. “.
In terms of valuation, DKNG is reported to be trading at a price/sales ratio of 3.6X versus 7X for a basket of app economy companies like Peloton Interactive (PTON), Video Zoom (ZM), Teladoc Health (TDOC) and Shopify (SHOP). Staszak and team believe the price cuts are unjustified given the company’s strong growth prospects and declining customer acquisition costs. Argus sets a new price target of $22 for DraftKings (DK).
DraftKings stock (DK) reassemble 2.55% in premarket action up to $19.65.