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Shares of DraftKings (NASDAQ:DKNG) fell 0.57% on Wednesday, ahead of its scheduled first quarter results on May 2nd, after the closing bell, with the sports betting major expected to benefit from sector tailwinds.
Sentiment has been bullish over the growth track of the sports betting sector, while concerns about heightened competition remain. Additionally, new U.S. states coming into the fray are expected to give a boost to volumes this summer on account of the Paris Olympics and the month-long European Football Championship.
Wall Street, on average, estimates DraftKings to post a quarterly EPS of -$0.11 (+78.4% Y/Y) along with a revenue of $1.12B (+45.5% Y/Y).
Goldman Sachs, which recently started coverage on the stock with a Buy rating, expected DraftKings to compound its revenue at a clip of over 20%. Furthermore, Goldman Sachs noted the company to be improving its unit economics.
Brokerage Oppenheimer attributed investor enthusiasm over the company due to its strong margins that are benefitting from brand advertising and product enhancement, generating higher user retention. The financial services firm saw limited state launches as a downside risk.
In its previous quarterly earnings, DraftKings delivered a mixed earnings report along with a strong guidance and an announcement regarding the acquisition of digital lottery services provider Jackpocket for $750M.
“DraftKings aims to maintain its 40%+ market share amidst new competitors entering the market,” said SA analyst, Howard Jay Klein. “The success of new entrants, such as BetESPN and Fanatics, will depend on their acceptance by the market and their ability to retain customers.”
“The company could generate $5.5 billion in adjusted EBITDA in 2030 due to the expected growth in the sports betting industry as well as its acquisition of Jackpocket, commented SA analyst, Ahmed Abdelazim.
Over the last one year, DKNG has beaten EPS estimates 75% of the time and has beaten revenue estimates 75% of the time.
Over the last three months, EPS estimates have seen three upward revisions and one downward. Revenue estimates have seen 17 upward revisions and zero downward.