JPMorgan analyst Joseph Greff has upgraded DraftKings, a sports betting stock, to overweight from neutral and raised the price target to $37, indicating a potential 35.2% upside. Despite a recent pullback in the stock since July, Greff views this as a buying opportunity due to the sector’s appealing prospects for same-store and new market growth, as well as improving operating expense control. The company’s shrinking reliance on revenue from new markets is expected to contribute to a better operating expense environment. Additionally, DraftKings’ strong product, scale, and brand are seen as competitive advantages against new entrants in the sports betting industry.
The recent underperformance of DraftKings has caught the attention of JPMorgan analyst Joseph Greff, who believes it presents a chance to invest in the stock. Greff upgraded DraftKings to overweight from neutral and increased the price target to $37, implying a potential upside of 35.2%. He highlights the attractive growth prospects in the same-store and new market segments of the sports betting industry and the positive operating expense control environment that exists. Despite the stock experiencing a 13% decline since July, its overall performance for the year has been exceptional, with a surge of over 140% since the beginning of 2023.
Greff further emphasizes DraftKings’ advantages in the market, including its strong product offerings, scale, and well-known brand, which create a competitive moat against new players in the sports betting space. The analyst predicts a promising future for DraftKings, updating the company’s forecasts and estimating a sports betting market size of $23.2 billion in the U.S. and Ontario by 2030, with the iGaming market reaching around $13.5 billion in the same timeline and locations. Overall, Greff’s upgrade and positive outlook reflect his confidence in DraftKings as an investment opportunity, driven by its growth potential and its ability to outperform its competitors.