Mizuho Securities analyst Benjamin Chaiken has maintained their bullish stance on DKNG stock, giving a Buy rating yesterday.
Benjamin Chaiken has given his Buy rating due to a combination of factors, including the anticipated impact of New Jersey’s proposed tax rate changes on DraftKings’ financial performance. The increase in internet gaming and online sports wagering tax rates from 15% and 13% to 25% is expected to affect DraftKings’ revenues significantly. Despite this, Chaiken’s analysis suggests that the company is well-positioned to manage these changes effectively.
Chaiken’s evaluation indicates that even with the new tax rates, the financial impact on DraftKings’ EBITDA is manageable, with an estimated $90 million impact. This assessment is based on the assumption of an 80% flow-through rate. Additionally, Chaiken draws parallels with Illinois’ recent tax rate increase, which DraftKings navigated with a $50 million EBITDA impact. These insights contribute to Chaiken’s confidence in maintaining a Buy rating for DraftKings, reflecting a positive outlook on the company’s ability to adapt and thrive in changing regulatory environments.
In another report released yesterday, Jefferies also maintained a Buy rating on the stock with a $63.00 price target.