Analyst Calls DraftKings Stock “Undervalued” Despite 2023 Outperformance

J.P. Morgan Securities upgraded DKNG to “overweight” from “neutral”

The shares of DraftKings Inc (NYSE:DKNG) are on the rise today, after J.P. Morgan Securities upgraded the stock to “overweight” from “neutral” and hiked its price target to $37 from $26. The firm called the stock “undervalued,” despite its now 148.7% year-to-date lead. At last glance, DKNG was up 3.6% at $28.34. 

On the charts, long-term support at the security’s 100-day moving average caught both pullbacks over the past couple months. Today’s pop also has the stock looking to snap a five-day losing streak. It’s also worth noting at short interest is up and represents 5.5% of the stock’s available float. 

Options traders are taking a cue from the bull note, with the 19,000 calls exchanged so far representing double the call volume typically seen at this point. The weekly 9/29 29-strike call is the most popular, with new positions opening there. 

These options are reasonably priced at the moment, per Schaeffer’s Volatility Index (SVI) of 51%, which ranks in the low 14th percentile of its annual range. This means options traders are pricing in low volatility expectations. 

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