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Shares of DraftKings Inc.
DKNG,
were rising nearly 7% in Wednesday morning action after BofA Global Research analyst Shaun Kelley upgraded the online-gambling stock to buy from neutral, writing of “accelerating product and revenue momentum” that are “are on the cusp of driving an inflection in margins and profitability.” The company “has reached a key cost inflection, as we believe the rate of growth in cost of revenue and external marketing has peaked,” Kelley wrote. He thinks the company can further see cost leverage as promotions ease in more mature markets and as DraftKings cools its spending on external marketing due to its better efficiencies and lower customer-acquisition costs. While the stock has shot up 171% so far this year, Kelley thinks market-share gains could power it even higher, and he boosted his price objective to $35 from $25. Shares closed Tuesday at $28.96 and were trading at $30.94 early in Wednesday’s session.
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