Why Cowen Says Buy the Dip in DraftKings
DraftKings is one of the online gaming stocks that dropped off over the past month, but one analyst thinks that it could jump nearly 25% from here.
Online gambling became popular as casinos shut down during the pandemic, and since then these stocks have risen to prominence. However, recently these online gaming stocks have dropped off, and this could provide an interesting buying opportunity. DraftKings Inc. (NASDAQ: DKNG | DKNG Price Prediction) is one of these stocks that pulled back over the past month, but one analyst thinks that it could jump nearly 25% from here.
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Cowen upgraded DraftKings to Outperform from Market Perform and issued a $70 price target, implying upside of 23.5% from the most recent closing price of $56.66.
According to the report, current legalization trends suggest that the second half of 2021 through the end of 2022 could result in DraftKings being live in states representing up to 51.2% of the adult population.
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The report specifically detailed:
In Q1:21, we have seen state-by-state market concentration solidify around the top 4 operators where collective OSB handle share exceeded 90% in WV (99.7%), IN (92.5%), IA (92.9%), IL (98.3%), MI (90.6%), and VA (99.0%).
The stock dropped below the 50-day moving average ($62.53) at the beginning of April and has remained there since. The 200-day moving average ($50.73) has been supporting the stock for over a year.
Excluding Monday’s move, the DraftKings stock had outperformed the broad markets with a gain of about 21% year to date. In the past 52 weeks, the share price was up closer to 191%.
DraftKings stock traded about 2% to $57.85 on Monday, in a 52-week range of $19.95 to $74.38. The consensus price target is $73.50.
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Chris Lange is a financial and geopolitical writer with more than a decade of experience covering a myriad of topics. He has published thousands of articles for 24/7 Wall St., with past coverage focused heavily on stocks, IPOs, healthcare, defense, global affairs, and technology.
His work has been quoted, or referenced by a number of outlets including Business Insider, USA Today, Yahoo Finance, MSN, The Motley Fool, and many other publications. A graduate of Southwestern University, he studied business with a focus on investments and has previous experience in banking and startups.
When not reading or writing the news, he is following his passion for Lacrosse, playing chess, or building solar projects with his dad.
