DraftKings (NASDAQ:DKNG) is down 3.05% in Monday trading amid what is a broad sell-off in tech names and story stocks.
DraftKings fell on the radar of Bank of America, which calls valuation the only thorn in the crown as it starts off coverage with a Neutral rating.
“Even when compared to ultra-high growth consumer “disruptors” (Tesla, Peloton, Beyond Meat, Virgin Galactic), DKNG trades at a +75%/+40% premium on 2022E/2025E sales despite having similar LT growth. Early stage enthusiasm for other scarce growth names have led to multiples of up to 25x forward revenue (implying ~$65/share) but these situations stabilized at closer to ~11x revenue (implying ~$30/share),” writes analyst Shaun Kelley.
BofA’s price objective of $40 works out to ~6X the 2025 EV estimate. The average Wall Street price target on DraftKings is $46.45.