DraftKings (NASDAQ:DKNG) was raised to Buy from Neutral at MoffettNathanson in a note Tuesday, with analysts also raising the price target for the stock by $6 to $37 per share.
Analysts noted DraftKings' fourth quarter 2022 letter to shareholders, in which CEO Jason Robins outlined his vision for the coming quarters and years now that the days of "free" money are behind us.
"Robins laid out his vision for DraftKings as a company that needs to accelerate its path to profitability by strategically cutting back on expenses while still investing behind its long-term competitive advantages," explained the analysts.
"Since then, DraftKings has delivered on both fronts, with expenses coming in much better while revenues continue to outperform expectations," analysts contend.
They also noted that in recent quarters, DraftKings has made strides in closing the market share gap with U.S. online sports betting leader FanDuel, while DKNG has also overtaken BetMGM as the number one player in U.S. iGaming in the second quarter.
"We expect this momentum in both sides of the business to continue, which should drive sustained, robust topline growth while the company remains focused on strategically reining in expense growth," said analysts. "Together, this puts DraftKings on the cusp of a meaningful inflection in profitability. Our conviction in the DraftKings story is stronger than ever."