DraftKings stock steady as Stifel reaffirms Buy rating after Railbird acquisition

Investing.com - DraftKings Inc. (NASDAQ:DKNG) maintained its Buy rating and $51.00 price target from Stifel following the company’s acquisition of Railbird Technologies and its subsidiary, Railbird Exchange. While the stock has shown significant volatility recently, InvestingPro data indicates analysts expect both sales and net income growth this year, with the company projected to turn profitable.

The digital sports entertainment company announced the acquisition after market close on Tuesday, though financial terms of the deal were not disclosed. Railbird Exchange is a CFTC-licensed exchange, giving DraftKings an established platform in the predictions market space. The company currently operates with a moderate debt level and trades at a high Price/Book multiple.

DraftKings plans to launch a standalone "DraftKings Predictions" app in the coming months, which will offer regulated event contracts across finance, culture, and entertainment categories. The company indicated it may expand into additional categories over time.

The acquisition follows earlier reports from Front Office Sports in July that suggested DraftKings had interest in acquiring Railbird. The official announcement confirms those earlier reports.

Stifel made no changes to its financial model or price target for DraftKings following the announcement, with the firm planning to update its outlook during its typical quarterly preview.

In other recent news, DraftKings Inc. has been in the spotlight with several significant developments. The company recently announced its acquisition of Railbird Technologies Inc., a move that expands DraftKings into the prediction markets space. This acquisition includes Railbird’s federally licensed exchange subsidiary and will allow DraftKings to offer regulated event contracts through a new mobile application called DraftKings Predictions. In terms of financial performance, Citizens has maintained its Market Outperform rating for DraftKings, despite anticipating a weak upcoming quarter with sports betting and iGaming revenue expected to fall short of market expectations.

In another development, Berenberg upgraded DraftKings’ stock rating from Hold to Buy, attributing the change to the company’s solid growth and margin improvements. Meanwhile, DraftKings has alerted its customers about account breaches resulting from credential stuffing attacks, a security incident that the company is actively investigating. These recent developments highlight a period of strategic expansion and operational challenges for DraftKings.

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