TD Cowen remains constructive on DraftKings, raises PT

TD Cowen analysts raised the firm’s price target on DraftKings (NASDAQ:) to $27 from $25 per share, maintaining an Outperform rating on the stock on Monday.

DKNG is set to report Q123 results on Thursday, May 4, and TD Cowen remains constructive on its performance, raising its estimates for the company’s 2023 revenue and adjusted EBITDA.

They explained in a note previewing the results that the new estimates reflect the firm’s Q1 state-by-state tracking/raised DKNG revenue and the less robust OSB legalization.

“Across our tracking states, DKNG held 27.5% of OSB GGR market share in Q1:23, a +46bps increase vs. Q4:22 at 27.1%,” the analysts wrote.

“FanDuel held 50.7% of OSB GGR share in Q1:23, a +162 bps increase vs. Q4:22 at 49.1%; BetMGM held 8.7% of OSB GGR market share in Q1:23, a -146 bps decline vs. Q4:22 at 10.1%. DKNG saw hold improvements y/y across IN, PA, IA, IL, MI, CT, and NY. The company is off to a strong start in new launch states OH (27.7% GGR share) and MA (34.5% GGR share). DKNG/FD/BetMGM held 86.9% OSB GGR market share in Q1:23, up +62 bps from 86.3% in Q4:22.”

Meanwhile, based on TD Cowen’s state-by-state OSB/iGaming tracking, the firm’s Q1:23 revenue estimate increases from $656 million to $702M (+68% y/y, -18% q/q), slightly above the consensus $697M estimate.