Draftkings Inc (NASDAQ:DKNG) stock is now a ‘Buy’ according to the equity research analysts over at Berenberg.
They believe the 20% plus sell off in the company’s stock over the past 10 days due to the threat of disruption from prediction markets has been overdone.
In a note to clients published on Wednesday, the analysts expect the gambling company to deliver strong profit growth over the coming years, as the focus of its market has shifted from revenue to profitability and loss minimization.
The Berenberg team noted that DraftKings has so far performed well in the US, and they expect that to continue as the market matures.
They added that the company’s underlying business has also delivered improvements particularly in terms of margin expansion, with DraftKings starting to close the gap on FanDuel in terms of net revenue margin during the first half of the year.
Continued progress with DraftKings’ margin expansion should support solid sports growth, according to the analysts.
Berenberg lowered its target price on DraftKings slightly to $43 per share, which still offers about 30% upside to current levels.
DraftKings shares rose 1.3% to $34.42 in midday trading on Thursday.