A bullish investor presentation by FanDuel parent Flutter Entertainment on September 25 prompted some Wall Street analysts to praise DraftKings as well.
They saw FanDuel’s success as giving a lift to DraftKings’s boat. Or, as J.P. Morgan analyst Joseph Greff thought, FanDuel’s “upbeat scale commentary is positive for DKNG and suggests the sector is really a two-horse race.”
Greff wrote of DraftKings, “We like it here and see it as somewhat contrarian and a fresh money idea.” He added that Wall Street remained skeptical of the company’s $900 million to $1 billion in cash-flow guidance for 2024, but said he thought it could go higher still.
The analyst further noted that DraftKings expected a hold percentage of 10.5, compared to FanDuel’s 16 percent, scaling to 12.5 percent by 2027. Greff believed that DraftKings is, with regard to promotions, “likely underwriting a high degree (conservatively) of continued competitive intensity.”
Applying FanDuel’s market assumptions to DraftKings’s business, Greff opined that DraftKings is on course for as much as $8.2 billion in revenue by 2027 and $1.9 billion in cash flow.
Truist Securities analyst Barry Jonas was also of the view that FanDuel’s positive prospect “bodes well” for DraftKings. Rattling off facts and figures provided by FanDuel parent Flutter Entertainment, he wrote, “We believe DKNG should see similar upside as the company continues to improve its parlay offering and parlay betting becomes more mainstream over time.”
Noting that certain Flutter Entertainment/FanDuel’s overseas ventures are promising, Jonas observed that DraftKings “could look to grow its business [internationally] over time, especially once U.S. growth slows.”
The one area in which Jonas seemed to find DraftKings inferior to FanDuel was risk management. He wrote that FanDuel’s pricing accuracy “helps to limit the variability of short-term results”—in comparison to those reported by DraftKings.
