Wells Fargo sees upside in DraftKings as ‘EBITDA estimates will continue to move higher’

DraftKings (NASDAQ:) was lifted to Overweight from Equal Weight with a new price target of $37, up from $28 per share at Wells Fargo on Monday.

Wells Fargo analysts said the firm is raising the stock after assessing the company’s potential 2025E EBITDA goal.

“EBITDA is inflecting more quickly/steeply than we previously envisioned, and we expect its op. momentum to continue,” they wrote in a note to clients.

“The bull thesis is playing out: DKNG’s mkt share is growing (2Q est GGR share +8-9 pts y/y, +6-7 pts ex-GNOG), structural hold is rapidly increasing (tracking +100bps y/y), and costs remain in check,” they added.

Furthermore, Wells Fargo believes DKNG’s EBITDA estimates will continue to move higher, “resulting in a more palatable valuation.”