The second week of the NFL season brought good news for sportsbooks, particularly DraftKings. Analyst Bernie McTernan from Needham reiterated a Buy rating and a $60 price target on DraftKings, citing the positive outcomes for sportsbooks in the second week of games. McTernan noted that sportsbooks likely benefitted from a significant number of underdogs winning in Week 2. This follows a similar trend in Week 1, where sportsbooks saw favorable results due to several top bet-on teams underperforming.
While data from New York sportsbooks indicated a lower hold rate in the first week compared to the previous year, McTernan believes that Week 2 saw a rebound for sportsbooks. He attributed this to underdogs winning over 50% of the games and covering the spread in 64% of matches, a scenario that typically benefits sportsbooks. Notable upsets in Week 2 included the Las Vegas Raiders defeating the Baltimore Ravens, the New Orleans Saints triumphing over the Dallas Cowboys, and the Minnesota Vikings overcoming the San Francisco 49ers.
The favorable results for sportsbooks weren’t the only positive news for DraftKings. App store rankings show that DraftKings was the third top sports app in the second week of the NFL season, climbing from fifth place the previous week. This upward trend was mirrored by other sportsbooks, including FanDuel, bet365, and BetMGM. However, some platforms, such as ESPN Bet and Fanatics sportsbook, experienced a drop in rankings from the first to the second week of the season.
Despite DraftKings’ strong performance in the app rankings, McTernan cautioned that this early success might not be sustained. He noted that DraftKings topped the iOS app store rankings in the first two weeks of last season but was narrowly edged out by FanDuel for the overall lead.
Despite this caveat, McTernan remains bullish on DraftKings’ future prospects, citing the company’s leadership position in the growing North American online gambling market, which he estimates to be a $35 billion opportunity.
As of Monday, DraftKings stock is up 1.30% to $38.29, representing a 13% year-to-date increase in 2024.
