Citi raises DraftKings stock price target to $58 on market multiple expansion

Investing.com - Citi raised its price target on DraftKings Inc. (NASDAQ:DKNG) to $58.00 from $55.00 while maintaining a Buy rating on the stock, citing recent market multiple expansion. The stock, currently trading at $42.89, has shown strong momentum with a 15.3% gain over the past six months, according to InvestingPro data.

The firm noted that quarter-to-date state data indicates DraftKings has experienced higher year-over-year hold rates, showing improvement in the company’s operational metrics.

Despite the positive hold rate trends, Citi analyst Steven Sheeckutz cautioned that DraftKings may need to lower its 2025 outlook due to the updated Missouri online sports betting launch timeline, now scheduled for December 2025, and recent state tax increases.

Citi lowered its 2025 Adjusted EBITDA estimate to the low end of DraftKings’ guidance range, reflecting these regulatory and tax headwinds that could impact the company’s financial performance.

The firm identified several key focus areas for investors alongside upcoming results, including the regulatory environment, hold rate improvements, the evolving prediction market landscape, and capital allocation strategies.

In other recent news, DraftKings Inc. has made several notable announcements and adjustments. The company plans to implement a 50-cent transaction fee on all mobile and online sports wagers placed in Illinois, effective September 1, 2025. This decision comes in response to recent tax hikes by the Illinois state legislature, which DraftKings CEO Jason Robins criticized for potentially benefiting illegal gambling operations. On the financial front, JPMorgan initiated coverage on DraftKings with an overweight rating, citing a potential upside to second-quarter estimates and a long-term positive outlook in the digital gaming sector. Bernstein SocGen Group also reiterated an Outperform rating, highlighting DraftKings’ enhanced live pricing capabilities and untapped potential in cross-selling opportunities. These analyst ratings reflect confidence in DraftKings’ growth prospects despite challenges in the regulatory environment. Additionally, DraftKings expressed willingness to remove the transaction fee should the tax legislation be repealed, emphasizing its commitment to sustainable industry practices.

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