DraftKings’ stock has nearly tripled this year — and it just won a new fan

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DraftKings’ performance on adjusted earnings before interest, taxes, depreciation and amortization (Ebitda) “is inflecting more quickly/steeply than we previously envisioned,” he wrote in his note to clients, and the company could continue showing off its operating momentum.

Politzer sees a path for DraftKings to deliver $1 billion in adjusted Ebitda in 2025. The company “is on the precipice of a major Ebitda inflection,” he wrote, as it’s poised to benefit from structural hold improvements, shorter payback periods, industry growth and consolidation and a pullback in promotional expenses across the broader landscape.

As earnings estimates move higher, DraftKings shares will have “a more palatable valuation,” in Politzer’s view. He lifted his price target on the stock to $37 from $28.

Politzer is also encouraged by DraftKings’ “better [Major League Baseball] engagement,” a strategic advantage that he says keeps users active outside of the critical football season, potentially helping to lower the amount DraftKings would need to spend to re-engage users when National Football League play begins in the third quarter.

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Other catalysts for the shares include a Nov. 14 investor day, which could bring new long-term projections for earnings, and state launches in Kentucky in September and in North Carolina in January.

Shares of DraftKings are near flat in Monday’s session after logging a 5.8% gain Friday in the wake of the company’s most recent earnings report.