Wall Street Bets is a roundup of recent notes from analysts covering the gambling industry.
DraftKings
DraftKings third-quarter earnings call Nov. 2 caught the attention of Wall Street analysts. Truist Securities’ Barry Jonas wrote that DraftKings’ result was “a robust Q3 beat & raise. … Today’s call further highlighted the company’s commitment to continued profitable execution. We increase estimates for the new 2023/2024 guide in the upper range, given: 1) we expect some conservatism around ESPN Bet & other new/revamped competition, but 2) also see many players returning to DraftKings after trialing other offerings, while 3) igaming continues to impress. We increase our PT to $45 (from $44) and reiterate our Buy rating.”
J.P. Morgan analyst Joseph Greff also commented on DraftKings, writing, “Post impressive third-quarter ‘23 results and equally strong fourth quarter ‘23 and 2024 outlooks, we bump our estimates to reasonable levels and project EBITDA of $1.25 billion, adjusted EPS of $2.39, and free cash flow per share of $2.18 in 2026. Our fourth quarter ‘23 and 2024 estimates go up to comport with updated guidance. Our projections reflect its currently strong technology and product momentum resulting in higher retention, increasing parlay mix, and reduced promotions and external marketing expenses, benefitting from its scale position, and resulting in increasing EBITDA flow-through.”
Golden Entertainment/Bally’s
Jefferies equity analyst David Katz called Golden Entertainment’s third quarter “solid,” writing that it “conveys the progression of Golden toward a focused entity with expectations for excess cash and a range of prospective uses. This leaves management with the deployment decision set that includes multiple external and internal investments as well as returns, which can take multiple forms, in a less than certain environment. We believe the shares could be tethered to the group’s performance pending evolution of these decisions. Thus, we remain Hold.”
Katz also commented on Bally Corporation’s earnings report that the third quarter “reflects the mix of growth opportunities with specific headwinds and capital requirements going forward. In particular, the capex requirements ahead, whether on or off-balance sheet, in conjunction with the elevated leverage, pose uncertainty that has drawn a negative reaction to the shares. That said, the company has productive assets that could evolve over time, which leaves us at Hold.”
