Morgan Stanley launches coverage on DraftKings (DKNG +0.1%) with an Overweight rating.
"We expect DraftKings to grow at a 31% '19-25 revenue CAGR in our basecase, 51% in our bull case, and 9% even in our bear case," writes gaming analyst Thomas Allen,
Allen notes legal U.S. sports betting and online gambling is in its very early stages, with less than $1.5B of revenue generated in 2019. He sees revenue growing 8X to $12B in 2025.
"COVID-19 today is having the clear negative effect of eliminating sporting events for people to bet on, but we expect resulting weaker state budgets to push more states to search for new tax revenues,and sports betting/iGaming to be the answer," predicts Allen.
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