ESPN Deal Could Have Big Benefits for DraftKings, Say Analysts

Analysts see important benefits accruing to DraftKings (NASDAQ:DKNG) if speculation regarding a sizable accord with Walt Disney’s (NYSE:DIS) ESPN unit comes to fruition.

Rumors to that effect emerged late Thursday, sparking an heroic rallying inwards the gaming company’s shares later(a) yesterday. Cooler heads are prevalent today, with the inventory trading modestly higher and as investors await check of the trade — something neither the sportsbook manipulator nor Disney are providing as of yet.

We experience a great, longstanding relationship with ESPN. However, we talk to a variety of companies on a regular basis and don’t comment on the specifics of those conversations,” according to a financial statement issued by the Boston-based gaming company.

ESPN reached marketing deals with Caesars Entertainment (NASDAQ:CZR) and DraftKings in 2020, so at that place is precedent for the media colossus working flat with gaming companies. It’s non in time open how a potentially expanded pact 'tween the sports network and DraftKings would bear on Caesars.

ESPN Deal Could Bring Advantages

Should DraftKings and ESPN come to terms, ,competitive benefits could fall to the former, notes Robert Oppenheimer analyst Jed Kelly.

In a take down to clients today, Grace Kelly points out a DraftKings/ESPN accord positions the gaming fellowship to best contend with contender FanDuel, which launched its have network, patch capitalizing as rivals such as BetMGM and Caesars Sportsbook pare advertising budgets.

The psychoanalyst adds an scoop correspondence with ESPN could live an apotheosis path for DraftKings to expand same-game parlays, which could follow essential to profitability.

Last month, DraftKings said it’s allowing bettors to compile same-game parlays across multiple sporting events. For example, a client could slice together a same-game parlay on DraftKings with ii legs from i biz and another pair of legs from a mettlesome played later that day.

Kelly adds that DraftKings is i of a scant list of gaming companies with the resources to gather Disney’s scale leaf requirements.

Maybe Sir Thomas More Good News for DraftKings

One of the decisive elements of an correspondence with ESPN testament be the extent of DraftKings’ financial obligations. Analysts are expecting a multi-billion figure, import at that place testament follow load on the money-losing gaming operator to present investors the allot will pay off dividends.

Exclusive of ESPN, DraftKings’ recent make and sack up gaming revenue (NGR) data point the keep company is closure inward on reduced losses.

“For Sept alone, we judge elevated win rates offered a $25M NGR tailwind, which is part offset printing past NGR headwinds from KS launch OSB in Sept (we pattern -$7M),” wrote Roth Capital psychoanalyst Edwad Engel inward a written report to clients today. “We increase our 3Q NGR/EBITDA forecast to $440M/-$316M vs the Street’s $430M/-$328M but consider way for upside as depress promos/marketing and a lucky July/Aug flow through to the bottom of the inning line.”

He rates the carry a “buy” with a $25 damage target, which is intimately above the Oct. 6 closure grip around $16.

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