Sports betting company DraftKings Inc (NASDAQ: DKNG) looks like a winner through the lens of promotional activity, app ranking and week two NFL results, according to a bullish analyst.
The DraftKings Analyst: Needham analyst Bernie McTernan had a Buy rating on DraftKings with a $44 price target.
The DraftKings Takeaways: DraftKings ranked as the top sportsbook for a second straight week, suggesting it could be the biggest winner in the sector, according to McTernan.
The latest comments followed the analyst's take on the first week of the NFL season.
DraftKings ranked fourth among sports-related apps in the iOS store last week. This was a slight drop from fourth place in the previous week but continued to outpace competitors.
FanDuel, a unit of Flutter Entertainment (OTC: PDYPY), ranked fifth in the latest results, moving down from fourth. FanDuel ranked higher at seventh than DraftKings at 10th before the NFL season started, but has since fallen.
Fanatics ranked 14th among sports apps on the iOS store for a second straight week.
BetMGM, a joint venture from MGM Resorts International (NYSE: MGM) and Entain, ranked 17th on the iOS sports app rankings, dropping four places from the previous week.
McTernan said sportsbooks kept their promotional offerings the same for the second week of the NFL season with DraftKings and FanDuel each offering a bet of $5 and get $200 in free bets promotion.
The second week of the NFL season could have a negative impact for sportsbooks, with only one major underdog winning and the over-on points scored hitting at a higher rate than the first week.
Once again, the University of Colorado football team led by Coach Deion Sanders made an appearance in McTernan's weekly recap. Colorado defeated Colorado State in double overtime but failed to cover the spread.
Colorado was one of the most bet on teams once again and sportsbooks could have benefitted from the team not covering against the spread in the game.
"Game results, we estimate was a neutral for the sportsbook this weekend with the University of Colorado failing to cover a positive for the books and offsetting a slightly lower than normal hold for the NFL," McTernan said.
The comments from McTernan came after GeoComply Solutions, which tracks logins and makes sure bettors are in physical locations of legalized territories, reported findings from the NFL's first week.
Geolocation transactions were up 56% from the opening week of the 2022 NFL season. GeoComply tracked over 242 million geolocation transactions from customers at U.S. sportsbooks for the first week of the 2023 NFL season.
"We see DKNG as a leader in the emerging North America online gambling market, a $35B market opportunity," McTernan said.
The analyst saw an upside to the bull case, with the total addressable market size of sports betting and iGaming hitting $50 billion.
"Within this market, we believe DKNG has a sustainable customer acquisition strategy that should continue to drive its first or second place position in all states."
DKNG Price Action: DraftKings shares are trading flat at $31.08 Monday versus a 52-week trading range of $10.69 to $34.49. Shares of DraftKings are up over 180% year-to-date in 2023.