DraftKings is clipped at Argus on concerns of revenue deceleration

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Argus downgraded DraftKings (NASDAQ:DKNG) to a Hold rating from Buy on concerns that the pace of revenue growth slows this year with fewer states approving online sports betting.

"DKNG is facing fierce competition from MGM and Wynn, which are expanding their online sports betting operations, and in our view needs to strengthen its marketing efforts," noted analyst John Staszak.

Staszak and team widen the 2022 loss estimate on DKNG $2.80 per share from $1.65 and set a 2023 loss estimate of $2.00 per share. Argus expects DraftKings to have its first profitable quarter in Q3 of 2023.

On valuation: "DKNG is trading at a price/sales multiple of 6, below the average of 14 for a basket of 'app economy' companies (PTON, ZM, TDOC, SHOP). However, we believe that the discount is warranted given the company's current challenges and that the stock is fully valued."

The view from Argus runs counter to Morgan Stanley, which called DraftKings (DKNG) its top sports betting/iGaming stock.

Shares of DraftKings (DKNG) fell 1.85% in premarket trading to $20.31 vs. the 52-week trading range of $16.56 to $74.38.