Shares of DraftKings are due for a comeback, especially as sports betting eyes legalization in California and beyond, Jefferies says. Analyst David Katz resumed coverage of the stock with a buy rating, citing shifting attitudes toward sports betting in North America. “While we recognize the marketing intensity exceeded our initial expectations, we maintain DKNG is among the best positioned with a strong brand, first-mover advantage, resources, and strategic clarity,” Katz wrote. “To prove this point, despite the competition, DKNG has generally held on to > 20% handle market share in key markets, and consistently scored well in our survey and brand matrix.” Some analysts have grown concerned with the company’s ability to support a cash burn before turning to profit. Katz said those fears are “overblown” and expects DraftKings to have enough cash to support a launch in California. “Given the company ended 1Q22 with $1.773B of cash, we expect the company should still have over $800-$850M of cash by the end of 2023,” he said. Shares of DraftKings have plummeted 54% this year but could soar nearly 162% based on Jefferies’ $33 price target. — CNBC’s Michael Bloom contributed reporting
