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DraftKings remains sports betting royalty
Shares of DraftKings have more than doubled this year. The stock has easily outperformed its rivals. JPMorgan is still optimistic.
Are you ready to bet on some football? And gambling stocks? Wall Street is wagering that, with the NFL and college pigskin seasons in full swing, DraftKings is going to be the clear leader as more states legalize sports betting and more people gamble on the outcomes of these games. (What’s the over/under on how long Chiefs tight end Travis Kelce and Taylor Swift remain a couple though?)
Shares of DraftKings are up nearly 150% this year. And even though they’ve fallen slightly from their 52-week high in the past few months, DraftKings is still trouncing the competition in the stock market. Shares of FanDuel owner Paddy Power are up a little more than 20% this year. That’s more than respectable of course, but a far cry from DraftKings’ performance.
Other sports betting companies, such as casino owners MGM, Caesars and Wynn are each up a more pedestrian 10% in 2023. And then there’s Penn Entertainment. The casino company that once hitched its wagon to Dave Portnoy and his Barstool Sports empire is now partnering with ESPN and has struggled mightily, plunging 25% this year.
So DraftKings is the clear winner on Wall Street. But one top analyst still sees more financial touchdowns ahead. JPMorgan’s Joseph Greff upgraded DraftKings shares to an “outperform” on Tuesday (a more jargony way of saying “buy”) and raised his price target on the stock to $37 a share. That’s more than 30% above the current stock price. Shares of DraftKings rose nearly 4% Tuesday following the upgrade.
This is actually the second time in recent months that JPM has boosted its rating on the stock. Greff and his team raised their rating from an “underperform” (aka “sell”) to the more lukewarm “hold” equivalent of “neutral” in August.
Sure, ESPN and Penn could be a formidable threat down the road for DraftKings. And there is still a lot of competition in the sports betting world in general. But for now at least, it seems that investors believe that it’s a bit of a Hail Mary pass to try and buy any of the other gambling stocks in the hopes that they can steal significant market share from DraftKings.
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