10 Best Casino Stocks To Buy According to Analysts

5. DraftKings Inc. (NASDAQ:DKNG)

Average Price Target Upside as of September 1: 44.93%

Number of Hedge Fund Holders: 56

DraftKings Inc. (NASDAQ:DKNG) operates in the digital sports entertainment industry. The company offers a variety of online services related to sports betting and gaming. It operates through various key segments including online sports betting, where users can bet on various sports events, Daily Fantasy League, a pioneer app that allows users to create fantasy teams and compete based on the real-time performance of the players, and iGaming, which includes casino games for states where gambling is legal.

The company faced some headwinds due to regulatory pressure from higher tax rates on sports betting. Regardless, DraftKings Inc. (NASDAQ:DKNG) had no problem growing its revenue by 26% year-over-year during the latest quarter.

It also achieved strong customer acquisition and increased its new customer acquisition by around 80% year-over-year, while simultaneously decreasing its customer acquisition cost by 40%.

Management is putting in efforts to improve its adjusted EBITDA to bring it between $900 million to $1 billion by 2025. Moreover, the management also plans to work around the higher tax issue by rolling out gaming tax for its customers in 4 states by next year.

DraftKings Inc. (NASDAQ:DKNG) has raised its revenue guidance midpoint, now indicating a 41% increase year-over-year. Management also expects the upcoming NFL season to considerably boost its earnings.

DKNG was held by 56 hedge funds in Q2 2024, with total stakes worth $2.25 billion. Marshall Wace LLP is the top shareholder, with a position worth $359.20 million.  Moreover, 38 analysts have a Strong Buy rating on the stock, with their 12-month median price target of $50 presenting a 45% upside.

Baron Discovery Fund stated the following regarding DraftKings Inc. (NASDAQ:DKNG) in its first quarter 2024 investor letter:

“Shares of DraftKings Inc. (NASDAQ:DKNG), a leading online sportsbook in the U.S., rose during the quarter following an earnings release that showed strong market share gains and an improved outlook for future profitability. Market share capture has been driven by investment in innovative product offerings that are resulting in strong customer retention. The company also announced the acquisition of JackPocket, a digital lottery courier service. We believe the acquisition will help DraftKings achieve a first-mover advantage in many states that offer the JackPocket service but have not yet legalized online sports betting and casino gaming. DraftKings is well positioned to expand margins and generate positive free cash flow as it grows revenues alongside the rapidly expanding U.S. sports betting market, in our view.”