DraftKings Unlikely to Acquire Entain, Says Citi Analyst

The bighearted intelligence currently surrounding DraftKings (NASDAQ:DKNG) is whether or not the online sportsbook manipulator will formalise a $22.4 1000000000000 hard currency and gillyflower takeover proposal for Entain Plc (OTC:GMVHY). One analyst doesn’t assure the courtship decorous a marriage.

In a promissory note to clients today inward which he initiates coverage of DraftKings stock, Citi psychoanalyst Jason Bazinet says he doesn’t expect the Boston-based gaming companion testament gain the Ladbrokes owner. He starts coverage of DraftKings with a “buy” rating and a $66 cost target. That implies upside of almost 37.5 percent from the Oct. 8 close.

Last month, DraftKings stunned the gaming manufacture by making a $20.5 one thousand million hard currency and equity extend for Entain, which the direct rejected. The wooer later floated a cash/stock entreat of $22.4 billion and has until Oct. 19 to make water a formal offer.

An array of unknowns linger. For example, Entain partners with MGM Resorts International (NYSE:MGM) on the BetMGM business, and the casino behemoth needs to O.K. to any transaction that would termination inward a competing business. However, it’s non in time crystalise if DraftKings is angling for a piece of the deal, or if it’s targeting Entain for its engineering capabilities, as some analysts feature suggested.

Entain or Not, Reasons to Like DraftKings Stock

It remains to be seen if DraftKings can stamp a trade for Entain. and at that place is some speculation that the suer is simply floating offers to drive the toll of the Coral proprietor higher, potentially forcing another purchaser to overpay. Even without Entain, Citi’s Bazinet sees positive degree catalysts for DraftKings stock.

The steadfastly has rapidly captured a leading posture inwards the rapidly growing US sports betting market. And we expect DraftKings to live a nett beneficiary, as client acquisition rationalizes and the market place consolidates,” said the analyst. “We also trust current Street expectations for payer ontogenesis are reasonable.”

Broadly speaking, the sell-side is bullish on DraftKings, But thorny issues, such as deficiency of profitability, mellow client acquisition costs, and marketing spending, librate on some investors’ minds. On the other hand, it’s possible the economic value of DraftKings’ clients increases in exponential fashion.

“We estimate the note value of a DraftKings sub will increase from $1,750 inwards 2021 to $4,900 past 2024. The hold inwards the EV per sub is goaded by: 1) higher [average revenue per user], 2) higher porcine benefit margins and 3) depress [customer acquisition costs],” said Bazinet.

The analyst adds DraftKings testament have just now shy of three trillion day-to-day users by 2023.

Other Betting Stocks Endorsed past Citi

Citi also starts reporting on sports betting information providers Genius Sports (NYSE:GENI) and Sportradar (NASDAQ:SRAD) with “buy” ratings.

A slew of Wall Street analysts are initiating reportage of Sportradar today, followers the Swiss company’s September initial public offering (IPO).

“We look the worldwide [online sports betting] marketplace to acquire 17% per annum from 2019 to 2025 underpinned past faster ontogenesis inward the US (due to regulatory tailwinds),” according to Citi. “We expect the iGaming securities industry to grow at a similar step of 16% per annum from 2019 to 2025.”