The share price of sports betting company DraftKings (NASDAQ:DKNG) has surged more than 8% today after it received a highly bullish "outperform" rating and price target from Evercore. Evercore's price target of $60 represented more than a 60% upside over the roughly $37 DraftKings was trading for at the time, though the stock has since climbed to around $40.
The massive upside forecast rests on the assumption DraftKings is perfectly positioned to profit from potential changes in sports betting policy. In his research note, Evercore analyst Kevin Rippey claimed "the market under appreciates the pull forward in US states' plans to legalize online sports betting." Heavily impacted by the COVID-19 pandemic, many states appear ready to pounce on the revenue potential offered by legalizing online sports betting -- and help fill their coffers even in the midst of quarantines or lockdowns.
Rippey says Evercore expects good results for DraftKings in both the short run and long run. His research note goes on to point out the "percentage of US citizens with access to online sports gambling is set to increase from 10% currently to more than 40% by the start of the 2022 NFL season." Because DraftKings already has tech in place to benefit strongly from this jump, he predicts "a path to nearly $900mn in EBITDA."
According to Seeking Alpha, out of 14 Wall Street analysts, nine are "very bullish" and five are neutral on the stock, with none "bearish" or "very bearish."
DraftKings also made the news recently when it signed on NBA player Michael Jordan as a special advisor, a move Variety reports also caused a greater than 8% one-day rise in its share value.