Gambling is an incredibly profitable sector, and so it would make sense for investors to cash in on recent legal changes throughout U.S states that are offering new opportunities for sports betting companies. DraftKings (NASDAQ: DKNG), a clear-cut industry leader, has caught the eye of retail investors today; trading in high volume with a gain of 14%. Furthermore, notes from Morgan Stanley analyst Thomas Allen suggest the firm’s backing of the sports betting site, on the basis that the U.S gambling industry is poised to explode.
With recent legal changes from New York, Louisiana, Ohio, Mayland, and Nebraska allowing online sports betting – savvy investors should be looking at DraftKings as an evident growth stock that is currently grossly undervalued. The stock has lost over 60% in the last 12 months, and now appears oversold and primed for what could shape up to be a record year for DraftKings, especially with California expected to follow suit in its legalization plans.
Allen backs his Overweight rating with data from the first few days of legal sports betting in New York; clarifying the sheer size of the opportunity on such unprecedented market expansion. Allen maintains a price target of $31 for DKNG stock.
Retail investors are snapping up a slice of an emerging market, and with revenue expected to grow 63% this year – it isn’t surprising. Is DraftKings a no-brainer of a buy? It seems unlikely that the company will continue to post losses given the legal changes, backed by the immediate surge in New York users following the legalization. The industry leader has never looked more appealing than right now.
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Oliver is a financial writer and analyst specialising in the US stock market, with years of personal experience in understanding micro/macroeconomic structures, market trends and fundamental analysis.