DraftKings (NASDAQ:DKNG) was added as a new best idea long at Hedgeye as the sports betting company appears to be making progress on fixing some of its issues and reversing lost market share. DraftKings shares fell 2.6% despite the positive call.
"Same state revenues are re-accelerating and the new state outlook is as bright as ever," Hedgeye analysts Todd Jordan and Sean Jenkins wrote in a note on Thursday. "The promotional and external marketing environment looks a little less aggressive than last year with CZR scaling back and WYNN essentially pulling out. DKNG over indexes to football so the timing is right for further sequential market share gains"
The new long call comes after Hedgeye was originally short on DraftKings (DKNG) in January of last year due to what it called at the time an "obscene" valuation combined with other negative catalysts such as declining market share.
While the macro environment is negative for the sector, DraftKings on a relative basis may benefit from a few secular tailwinds.
Hedgeye is hosting a presentation on DKNG at 2 pm.
On Monday Wells Fargo said sports betting volume is reported to have been strong once again for the third weekend of the NFL season, although there has also been an uptick in promotions.