Shares of Draftkings Inc (NASDAQ:DKNG) rose after JPMorgan analysts upgraded their rating on the stock from ‘Neutral’ to ‘Overweight’ and boosted their price target from US$26 to US$37.
Shares of the online gambling operator added 2.5% to about US$28 shortly after noon on Tuesday.
In a note to clients, the JP Morgan analysts wrote that DraftKings has lagged too far behind the S&P 500 index since July, with it seeing a pullback of about 13%.
"We are taking advantage of sluggish share price performance since late July given what we continue to think is an appealing sector, with attractive same-store and new market growth prospects, against the backdrop of an industry-wide improving operating expense control environment (in part due to an increasingly smaller percentage of revenues coming from newer markets, which have meaningful new user acquisition costs and up-front investment)," they wrote.
They added that DraftKings has a "strong moat" that should allow it to compete against upcoming names in the online gaming space such as ESPN Bet and Fanatics.
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