DraftKings Rolls Out Online Sportsbook In Virginia Ahead of Super Bowl

DraftKings on Jan. 24 announced the launch of its mobile and online sportsbook in Virginia, which now represents the 12th state in the US where the online sports betting and gaming company’s product is available.

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The launch came ahead of the Super Bowl, which is scheduled to begin in the first week of February. DraftKings (DKNG) rolled out its online and mobile sportsbook in the state of Michigan on Jan. 22. States like Virginia and Michigan have already legalized online sports betting and many other states in the US are also looking at doing the same.

Earlier this month, the Governor of New York, Andrew Cuomo, indicated his support to legalize online sports betting and said, “New York has the potential to be the largest sports wagering market in the United States, and by legalizing online sports betting we aim to keep millions of dollars in tax revenue here at home, which will only strengthen our ability to rebuild from the COVID-19 crisis.”

The company has yet to announce its 4Q results. At its most recent 3Q earnings release, DraftKings raised its FY20 revenue guidance from a range of $500-$540 million to a range of $540-$560 million. (See DKNG stock analysis on TipRanks)

DraftKings’ shares were down by 1.9% and closed at $52.53 on Jan. 22.

On Jan. 20, Morgan Stanley analyst Thomas Allen upgraded the stock from Hold to Buy and raised the price target from $39 to $60. Allen is bullish on the stock citing “impressive sports betting and iGaming trends.”

“We also expect DKNG to start to talk about profitability in NJ [New Jersey], as FanDuel did, countering the bear thesis that the industry will never be profitable,” Allen wrote in a note to investors.

“Bringing this all together, we expect Street 2025e EBITDA to rise from $434m today closer to our new $1B forecast (up from $761m). With us still forecasting US sports betting revenue/adult at a discount to Australia/UK, potential for greater share concentration, and a few slower growth peers trading at >30x, further upside looks attainable with our bull case now $179,” the analyst added.

Wall Street analysts are cautiously optimistic about the stock and the consensus is a Moderate Buy with 13 analysts recommending a Buy, 5 analysts suggesting a Hold, and one analyst recommending a Sell. The average price target of $63.89 implies 21.6% upside potential to current levels. Shares have jumped by 22.2% in the past three months.