Now may be a great time to place a monster bet on next-generation sports wagering stock DraftKings (DKNG +4.51%).
At least that's the view of one analyst team that recently upgraded its recommendation on the company while cranking the price target notably higher. DraftKings has a growing fanbase of believers, and these prognosticators are now clearly among them.
DraftKings has gone from hold to buy
The leading pundit making the changes was Barclays Equity Research Analyst Brandt Montour. In mid-February, Montour and his team changed their recommendation on DraftKings to overweight -- buy, in other words -- from the previous stance of equal weight (hold).
Montour also pushed his price target up by almost 22%; it now stands at $50 per share, from the former $41. That would represent a 17% upside over the next 12 to 18 months from the current price.
Montour's new take is due to two key factors. First, he and his team believe that the digital gambling market in this country is poised for an upswing. Secondly, they believe that fears about rising competition are overblown, while the "incremental momentum" from the company's partnerships and acquisitions is undervalued. DraftKings also has an underappreciated position in the iGaming market, in their view.
NASDAQ: DKNG
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Top players don't always win, however
With a glut of advertising from various betting companies during events like U.S. football games, the public could be forgiven for thinking there are a variety of businesses competing for the American digital gambling dollar. The top of the market is more restricted than that; thankfully for DraftKings and its shareholders, the company is one of the entities on that peak.
Yet prominence doesn't mean automatic success. While the company has grown its top line impressively and it's to be commended for being so assertive with its marketing, it continues to lose money on the bottom line. Investors would be more excited about the company if it could flip those numbers from red to black, and do so with some consistency.
