DraftKings (NASDAQ: DKNG) delivers its fourth-quarter earnings update next week, and one analyst is advising investors to take profits in the stock.
In a note to clients Thursday, Roth MKM analyst Edward Engel lowered his rating on the sportsbook operator to “sell” from “neutral” with a $15 price target. That’s below where the stock resided entering Thursday’s trading session. The analyst noted one problem facing DraftKings is the cost of rolling out its offerings in new states.
During 4Q22 results, we expect mgmt to signal disappointing 1Q23 EBITDA as new state launches require more up-front investment than Street forecasts imply,” wrote Engel.
There may be something to the analyst’s thesis regarding state debuts. Mobile sports wagering recently went live, or will soon do so, in Maryland, Massachusetts, and Ohio — each of which is expected to have a material impact on topline growth for major sportsbook operators, such as DraftKings.
In a note to clients Thursday, Roth MKM analyst Edward Engel lowered his rating on the sportsbook operator to “sell” from “neutral” with a $15 price target. That’s below where the stock resided entering Thursday’s trading session. The analyst noted one problem facing DraftKings is the cost of rolling out its offerings in new states.
During 4Q22 results, we expect mgmt to signal disappointing 1Q23 EBITDA as new state launches require more up-front investment than Street forecasts imply,” wrote Engel.
There may be something to the analyst’s thesis regarding state debuts. Mobile sports wagering recently went live, or will soon do so, in Maryland, Massachusetts, and Ohio — each of which is expected to have a material impact on topline growth for major sportsbook operators, such as DraftKings.