Barclays has crowned DraftKings as a stock worth buying. Analyst Brandt Montour upgraded the sports betting stock to overweight from equal weight and upped his price target by $9 to $50. Montour's new price target implies 22.4% upside over Thursday's close. "We're less concerned than we were 3-6 months ago over increased competition, and see the ~10% pullback off the highs post its (strong) 4Q report as an attractive near-term entry point," Montour wrote in a Friday note to clients. As a whole, Montour said the digital gaming market should see notable growth ahead and has a larger total addressable market than Barclays previously forecast. That comes as sports betting shows "staying power" in the everyday life of American sports viewers, he added. Specifically, Montour raised the expected addressable markets for DraftKings' online sports betting and iGaming businesses by between 1% and 3% over the next several years. He said the businesses are "synergistic" to one another. Montour said the iGaming business, which has the top market share in the space, is still underappreciated by investors. Meanwhile, he said the 30% market share of DraftKings' online sports betting business should be defensible. Parlays, which are essentially combination bets, also provide a reason for bullishness on the stock, the analyst said. Increasing parlay mix can create a long runway of earnings upside, he said. It's also part of the reason why the company has been able to surpass Wall Street expectations and raise forward guidance over recent quarters. Montour tied the recent pullback in shares to profit taking following the NFL season's conclusion and a Wall Street Journal report about the risk of gambling. Flutter's upcoming release of performance metrics could also be causing unease, he added. DKNG YTD mountain DraftKings, year to date Despite the rough patch, he said the stock is the only pure play, scaled player in the sports betting space for the foreseeable future. He called the slide a good place for investors to add exposure. DraftKings' shares climbed more than 3% before the bell. Even with recent turmoil, the stock is up more than 15% compared with the start of 2024.
