Please ensure Javascript is enabled for purposes of website accessibility

DraftKings Could Have a 31% Upside, New Analyst Coverage Says

By Rhian Hunt - Jan 27, 2021 at 11:24AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Legalization of betting in three big states is seen as the driver of the future gains.

Fantasy sports operator DraftKings (DKNG 8.18%) has seen strong gains as the popularity of online sports betting rises quickly across America. Financial analysis firm Bernstein underscored that fact with its first-ever coverage of the company. Bernstein gave DraftKings a price target of $71 per share, more than 31% higher than its stock price at the start of trading today, along with an outperform rating.

The accompanying research note makes predictions about both the future of DraftKings specifically, and digital sports betting in the United States in general. The firm forecasts a $25 billion market by 2025 and a $30 billion market a decade in 2030, at which point it expects 85% of the country's population to have access to legal online sportsbooks.

A happy-looking businessman betting on sports in his office, with sports betting open on his computer.

Image source: Getty Images.

Bernstein points to three high-population states, remarking "none of the top 3 markets (California, New York, and Florida) have been fully legalized" and predicts legalization there by 2022 or 2023 at the latest. Other companies also have their sights on these states. Casino company Caesars Entertainment (CZR) bought a stake in fantasy sports platform SuperDraft, citing the latter's presence in 35 states, including what might be dubbed the "big three," as one reason. Another casino operator, Bally's Corporation (BALY 9.22%), is buying fantasy sports company Monkey Knife Fight, which is taking aim at California, Florida, and Texas, to establish "a unique position in these states to run a profitable fantasy sports site, while readying ourselves for gambling." 

DraftKings continues aggressively expanding in step with new state sports betting legalization measures. It just started operating in its 12th state, Virginia, with CEO Jason Robins remarking, "we hope to be the sportsbook of choice for Virginians who enjoy having skin in the game," Casino News Daily reports.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

DraftKings Inc. Stock Quote
DraftKings Inc.
DKNG
$14.15 (8.18%) $1.07
Caesars Entertainment Corporation Stock Quote
Caesars Entertainment Corporation
CZR
Bally's Corporation Stock Quote
Bally's Corporation
BALY
$20.61 (9.22%) $1.74

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
336%
 
S&P 500 Returns
115%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 06/26/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.