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Sports betting platform DraftKings Inc (NASDAQ:DKNG) gets continued praise from an analyst, despite competition from ESPN Bet.
The DraftKings Analyst: Needham analyst Bernie McTernan has a Buy rating and a price target of $50 on DraftKings.
Related Link: DraftKings Q3 Earnings Highlights: Shares Climb On Revenue, EPS Bet, Company Raises 2023 Guidance
The Analyst Takeaways: PENN Entertainment‘s (NASDAQ:PENN) ESPN Bet is a concern for DraftKings, but McTernan isn't too concerned.
"We believe the new customer promotions is roughly in-line with the industry and therefore do not expect a change to the benign competitive environment," McTernan said of ESPN Bet.
Penn Entertainment licenses the ESPN brand from The Walt Disney Company (NYSE:DIS). The company is offering $200 in bonus bets to ESPN Bet users.
"We do not think the ESPN Bet offer is overly aggressive and therefore unlikely to change the competitive intensity of the industry."
ESPN Bet ranks first among sports apps, as tracked weekly by McTernan. DraftKings ranked fifth for Week 11 of the NFL season, falling from third place in the prior week. FanDuel, a unit of Flutter Entertainment (OTC:PDYPY) moved to fourth place from fifth place in the prior week.
The results of Week 11 of the NFL season were likely mixed for sportsbooks, the analyst explains. One of the five largest underdogs won, but the trend of the under on total points continued to hit in a majority of games.
Overall, the analyst doesn't see a huge impact to DraftKings market share given the new competition from ESPN Bet.
"We see DKNG as a leader in the emerging North America online gambling market, a $35B market opportunity."
DraftKings has a "sustainable customer acquisition strategy," the analyst says. It should hold a market share position of first or second place in legalized states.
DKNG Price Action: DraftKings shares are up 1% to $38.92 versus a 52-week trading range of $10.69 to $39.06. The stock hit new 52-week highs on Monday, and shares are up over 250% year-to-date in 2023.
