Yahoo Finance DraftKings Inc. (NASDAQ:DKNG) Just Reported First-Quarter Earnings And Analysts Are Lifting Their Estimates
Shareholders of DraftKings Inc. (NASDAQ:DKNG) will be pleased this week, given that the stock price is up 12% to US$24.58 following its latest first-quarter results. Revenues were a bright spot, with US$770m in sales arriving 9.9% ahead of expectations, although statutory earnings didn't fare nearly so well, recording a loss of US$0.87, some 2.5% below consensus predictions. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on DraftKings after the latest results.
Check out our latest analysis for DraftKings
Following the latest results, DraftKings' 27 analysts are now forecasting revenues of US$3.20b in 2023. This would be a sizeable 23% improvement in sales compared to the last 12 months. The loss per share is expected to greatly reduce in the near future, narrowing 30% to US$1.99. Before this earnings announcement, the analysts had been modelling revenues of US$3.00b and losses of US$1.99 per share in 2023.
The consensus price target held steady at US$25.20despite the upgrade to revenue forecasts and ongoing losses. The analysts seems to think the business is otherwise performing roughly in line with expectations. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. There are some variant perceptions on DraftKings, with the most bullish analyst valuing it at US$38.00 and the most bearish at US$15.00 per share. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.
Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. We would highlight that DraftKings' revenue growth is expected to slow, with the forecast 32% annualised growth rate until the end of 2023 being well below the historical 59% p.a. growth over the last three years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 11% per year. So it's pretty clear that, while DraftKings' revenue growth is expected to slow, it's still expected to grow faster than the industry itself.
The Bottom Line
The most important thing to take away is that the analysts reconfirmed their loss per share estimates for next year. Pleasantly, they also upgraded their revenue estimates, and their forecasts suggest the business is expected to grow faster than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have forecasts for DraftKings going out to 2025, and you can see them free on our platform here.
Even so, be aware that DraftKings is showing 2 warning signs in our investment analysis , you should know about...
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
Join A Paid User Research Session
You’ll receive a US$30 Amazon Gift card for 1 hour of your time while helping us build better investing tools for the individual investors like yourself. Sign up here
