Draftkings Inc (NASDAQ:DKNG) is facing a high bar when it comes to Wall Street's expectations for its third quarter earnings but analysts at the Bank of America (BoA) think the company can deliver and raise its full-year guidance.
The digital sports entertainment and gaming company will report its latest financial results after the market close on Thursday, November 2.
Street analysts, on average, expect DraftKings to report a 40% year-over-year jump in revenue from $501.94 million to $701.03 million.
Its loss per share is expected to improve from $1 per share to a loss per share of $0.69.
The BoA analysts have pegged 3Q revenue of $756 million and adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) of negative $190 million, ahead of the consensus expectation of negative $216 million.
“We think DraftKings will beat 3Q expectations as they steadily gain market share,” the analysts wrote in a note to clients.
They expect DraftKings’ 3Q results to be driven by strength in online sports betting (OSB) and company-specific market share gains.
“We estimate 3Q OSB market share of 35% versus 31.6% in 2Q and versus our prior 3Q model's 29%,” they wrote.
“We do bump up promotions slightly to 38% (from prior 36%) based on state-level data, but we think it makes sense for DKNG to be reinvesting some of their very strong revenues given their market share momentum.”
The analysts also expect DraftKings to provide initial 2024 guidance. They expect it to guide $4.5 to $4.6 billion in revenue and $250 to $350 million in EBITDA. In an upside scenario, they see $4.7 billion in revenues and $400 million in EBITDA.
Street analysts, on average, expect DraftKings to guide revenue of $4.3 billion and EBITDA of $267 million.
The analysts concluded by reiterating their ‘Buy’ rating on DraftKings and $38 price target citing its continued strong growth, execution, and cost/profitability inflection.
DraftKings traded higher on Tuesday afternoon, up 3.4% at US$29.10.
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