In the latest close session, DraftKings (DKNG) was down 1.74% at $44.04. The stock fell short of the S&P 500, which registered a gain of 0.07% for the day. Meanwhile, the Dow experienced a drop of 0.7%, and the technology-dominated Nasdaq saw an increase of 0.18%. Shares of the company have appreciated by 4.87% over the course of the past month, outperforming the Consumer Discretionary sector's gain of 4.6%, and lagging the S&P 500's gain of 5.71%.Market participants will be closely following the financial ...

Core Viewpoint - Morgan Stanley's strategy team highlights 15 stocks with short-term catalytic potential, indicating that S&P 500 index earnings growth in Q2 may exceed expectations [1] Earnings Expectations - The market anticipates a 5% year-over-year increase in S&P 500 Q2 earnings per share and over 4% revenue growth, but actual growth may be stronger [1] - The seven major tech companies are expected to see a 14% increase in net profit, while the remaining 493 constituents may experience a 3% decline [1] - Despite analysts lowering earnings expectations from April to May, the earnings revision has rebounded from -25% to approximately 1%, suggesting Q2 earnings will likely exceed expectations, aligning with the historical average of 4%-5% [1] Recommended Stocks - **argenx SE (ARGX.US)**: undervalued R&D pipeline, target price $700 [2] - **Atlassian (TEAM.US)**: continuous revenue growth potential over 20% and expected margin expansion, target price $320 [3] - **Chewy (CHWY.US)**: benefits from marketing and product optimization, expected revenue to maintain or exceed Q1 levels, target price $50 [4] - **CVS Health (CVS.US)**: advantages from competitor store closures and growth in pharmacy benefit management, target price $80 [4] - **DraftKings (DKNG.US)**: potential earnings inflection point in Q2, with actual licensing rates offsetting tax and regulatory pressures, target price $52 [4] - **Eaton Corporation (ETN.US)**: benefits from improved profit margins in U.S. electrical business, target price $375 [5] - **Eli Lilly (LLY.US)**: core products Mounjaro and Zepbound expected to contribute $8.2 billion in revenue, exceeding expectations may lead to 2025 guidance upgrades, target price $1,135 [5] - **F5 (FFIV.US)**: positive outlook due to demand growth in cloud and load balancing products, target price $305 [6] - **NVIDIA (NVDA.US)**: strong end-user demand and accelerated shipments of rack-level products supporting supply-side growth, target price $170 [7] - **Omada Health (OMDA.US)**: operational leverage through technology empowerment and multi-disease sales, target price $25 [8] - **Southwest Airlines (LUV.US)**: potential stock rebound if internal guidance is met and baggage fee impacts are confirmed as limited, target price $38 [9] - **Valley National Bank (VLY.US)**: expected net interest income growth of 3% quarter-over-quarter, target price $11 [10] - **Western Digital (WDC.US)**: undervalued gross margin expansion prospects, target price $85 [11] Cautious Outlook - **National Storage Affiliates Trust (NSA.US)**: cautious due to expected funds from operations (FFO) per share being below market and company guidance, target price $30 [12] - **Teradyne (TER.US)**: revenue and earnings per share forecasts for FY2026 are 7% and 14% below Wall Street expectations, target price $74 [13] Summary - Overall, Morgan Stanley's recommendations combine company fundamentals, industry trends, and market sentiment, providing diversified options for investors [14]

Core Insights - Light & Wonder (LNW) is currently viewed as a stronger investment option compared to DraftKings (DKNG) for value investors seeking undervalued stocks [1][3][7] Valuation Metrics - LNW has a forward P/E ratio of 17.65, significantly lower than DKNG's forward P/E of 33.50, indicating LNW may be undervalued [5] - The PEG ratio for LNW is 0.63, while DKNG's PEG ratio is 0.64, suggesting LNW has a more favorable growth outlook relative to its valuation [5] - LNW's P/B ratio stands at 13.32, compared to DKNG's P/B of 45.31, further highlighting LNW's relative undervaluation [6] Earnings Outlook - LNW has a Zacks Rank of 1 (Strong Buy), indicating a stronger improvement in its earnings outlook compared to DKNG, which has a Zacks Rank of 3 (Hold) [3][7] - The overall valuation metrics and earnings outlook position LNW as the superior value option in the gaming sector [7]

Group 1: Trade Cycles Overview - Trade Cycles is a new trading strategy developed by TradeSmith, which identifies seasonal market trends with high accuracy [1][2] - The tool has become essential for quantitative analysis, helping to pinpoint optimal buying times based on historical data [2][3] Group 2: Seasonal Recommendations - The back-to-school season is projected to significantly boost sales for retailers, with companies like Carter's Inc. (CRI) potentially seeing a 30% increase, while Target Corp. (TGT) may experience a 5% revenue boost [6] - Despite the seasonal potential, Carter's and Target face challenges due to tariff threats, leading to negative sentiment and forecasts of profit declines [7] - Hanesbrands Inc. (HBI) is recommended as a more attractive investment opportunity, historically rising 5% on average during summer months, with a notable 60% surge between July and November in 2024 [8][9] Group 3: Enphase Energy Insights - Enphase Energy Inc. (ENPH) has shown a significant seasonal pattern, with stock surging 42% during summer months in the past, but facing a decline during President Biden's term [15][16] - Current market conditions suggest a favorable environment for Enphase, with shares trading at 16X forward earnings, significantly lower than the Biden-era average of 45X [17] - The company is well-positioned to benefit from increasing solar demand, with 69% of new electric generating capacity expected to be solar by 2025 [18][19] Group 4: Vail Resorts Analysis - Vail Resorts Inc. (MTN) typically sees stock price increases of 7.4% during the winter months, but the best buying opportunity is in September when season passes are sold at peak prices, leading to an average increase of 10.5% from September to November [22][23]

Core Insights - FTSE Russell recalibrates its U.S. indexes annually to reflect market changes, with the Russell 1000 Index seeing significant additions and exclusions in 2025 [1] - The reconstitution event was marked by a record 2.5 billion shares traded in 0.9 seconds, amounting to $102.4 billion in securities [2] Russell 1000 Additions and Exclusions - The Russell 1000 Index added 37 new constituents, including 19 companies promoted from the Russell 2000 Index and 18 new entrants, with notable IPOs like SailPoint, Inc. and Karman Holdings, Inc. [3] - Core Scientific, Inc. made a significant leap from being a micro-cap stock to entering the Russell 1000 directly [4] - Rivian was added to the Russell 1000, while other EV makers such as Nikola and Lucid were removed, along with green energy company Plug Power and Beyond Meat [5] Market Implications - Understanding the Russell reconstitution is essential for investors, with advice from LPL Financial suggesting patience and awareness of potential volatility due to various economic factors [6]

Core Insights - DraftKings Inc. (DKNG) is outperforming competitors in customer acquisition within the sports betting sector, showcasing strong user growth and retention strategies in Q1 2025 [1][5] Customer Acquisition and Marketing Efficiency - New customer acquisition met expectations, with a notable emphasis on the efficiency of scaling operations, optimizing marketing costs, and benefiting from brand equity and improved promotional targeting [2][4] - The company has achieved better gross margins and EBITDA performance despite facing challenging sports outcomes [2] Product Innovation and Engagement - Over 50% of the total handle in Q1 2025 originated from live betting, marking a significant milestone for DraftKings [3] - Successful integration of acquisitions like SimpleBet and Sports IQ has enhanced real-time wagering capabilities, leading to increased user engagement [3] - There is a notable rise in the adoption of parlay and same-game parlay bets, which are associated with higher structural hold rates [3] Profitability and User Maturity - Despite customer-friendly outcomes reducing actual sportsbook hold to 9.5%, structural hold increased to 10.4%, indicating strengthening profitability [4] - As newly acquired users mature, promotional intensity decreases while contribution profit rises, demonstrating effective management across jurisdictions [4] Competitive Landscape - DraftKings is gaining ground against FanDuel and BetMGM, with recent trends indicating a lead in live betting and product enhancements [6][7] - FanDuel, while still leading in market share, is experiencing pressure as DraftKings narrows the gap through efficient customer acquisition strategies [7] - BetMGM is lagging in sportsbook engagement despite strong iGaming performance, highlighting DraftKings' advantage in product innovation [8] Financial Performance and Valuation - DKNG shares have increased by 30.3% over the past three months, slightly trailing the industry's growth of 31.2% [9] - The company is currently trading at a premium with a forward 12-month price-to-sales ratio of 5.69X [12] - Zacks Consensus Estimates indicate a significant year-over-year earnings growth of 226.7% for 2025 and 61.3% for 2026 [15]

Group 1 - YieldMax® launched the YieldMax® DKNG Option Income Strategy ETF (NYSE Arca: DRAY) to generate current income through options-based strategies on DraftKings, Inc. (DKNG) [1] - DRAY is managed by Tidal Financial Group and does not invest directly in DKNG [1][2] - DRAY is the newest addition to the YieldMax® ETF family, which aims to deliver current income to investors [2] Group 2 - DRAY will be classified as a Group C ETF, with its first distribution expected to be announced on August 20, 2025 [2] - The distribution information for all outstanding YieldMax® ETFs includes various ETFs with different distribution rates and frequencies [3][4] - The YieldMax® ETFs have a gross expense ratio of 0.99%, with some exceptions having different management fees and acquired fund fees [7]

Core Insights - DraftKings is in negotiations to acquire Railbird, a regulated prediction market platform based in New York [1] - Railbird was founded in 2021 by former Point72 analyst Myers Safran and Edward Tian, and received approval from the CFTC in June 2025 to operate as a designated contract market [1] - Railbird's platform allows users to trade event contracts, enabling betting on real-world event outcomes across various sectors, including economic indicators, public policy decisions, weather patterns, entertainment trends, and sports results [1] Company Developments - DraftKings has previously applied for federal approval to operate a prediction market but withdrew the application months later [1] - In the sports betting sector, Flutter Entertainment's FanDuel has reportedly engaged in discussions with Kalshi, a well-known regulated exchange focused on trading future event outcomes [1] Investment Landscape - Railbird's investors include the CEO of SeatGeek and several venture capital firms, indicating strong backing and interest in the prediction market space [1] - The platform aims to cover all 50 states in the U.S., highlighting its ambition to expand its reach and user base [1]

You bought more DraftKings. DraftKings is up 14% in a month. It's great when you can have these midcap, small cap names ride the coattails, but I mean your true investment are in the large cap.It's fun to get into some of these smaller names. We bought DraftKings. To your point, it's up 14%.I like the momentum, but this is like a dualopoly. They have 80% of the market share in combined with um the other name DraftKing and FanDuel. Thank you.Yeah, FanDuel. So 80%. And you've only got 25 states so far for Dra ...

Core Insights - DraftKings Inc. is shifting from a high-growth model to a disciplined, cash-generating business, with 2025 expected to be a pivotal year for the company [1] - The company has reaffirmed its free cash flow target of $750 million, indicating improvements in core business fundamentals such as margin expansion and promotional efficiency [1][5] - Despite short-term volatility from sports outcomes, DraftKings is leveraging strong operational capabilities to pursue long-term cash generation [1] Financial Performance - In Q1 2025, DraftKings reported $103 million in adjusted EBITDA, a significant increase from $22.4 million in the same period last year, despite a $170 million revenue hit from unfavorable sports outcomes [2] - Management anticipates a substantial increase in EBITDA for Q2, projecting it to exceed $200 million, driven by sportsbook handle [2] - The structural sportsbook hold is expected to rise from 10.4% in Q1, contributing to improved net revenue margins in the range of 7-7.5% [3] Margin and Revenue Expectations - DraftKings expects to generate an additional $50 million in revenues and $37 million in EBITDA in 2025 through optimized promotional spending and improved margins [3] - The company forecasts an adjusted gross margin of 46% in 2025, reflecting an increase of over 300 basis points year-over-year [3] Regulatory Environment - The operating environment remains challenging due to regulatory issues, including Maryland's tax hike on sports betting and Jackpocket's exit from digital lottery operations, which together are expected to impact revenues by $30 million and EBITDA by $26 million [4] Capital Discipline - DraftKings is maintaining strong capital discipline, with an expected $100 million gap between adjusted EBITDA and free cash flow, supported by low capital expenditures and controlled working capital [5] - The company has $1.1 billion in cash on its balance sheet, positioning it well to meet its 2025 free cash flow target [5] Stock Performance and Valuation - DraftKings shares have increased by 24% over the past three months, compared to the industry's growth of 40.5% [6] - The stock is currently trading at a forward 12-month price-to-sales multiple of 5.31X, significantly higher than the industry average of 3.66X [7] Earnings Estimates - The Zacks Consensus Estimate for DraftKings' 2025 earnings per share has been revised upward from $1.40 to $1.46, indicating strong analyst confidence in the stock's near-term prospects [8] - Projections suggest a 239.1% rise in earnings for DraftKings in 2025, while competitors like Accel Entertainment and Boyd Gaming are expected to see declines [10]