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Investing.com - Citi has reiterated a Buy rating and $58.00 price target on DraftKings Inc. (NASDAQ:DKNG) following Flutter’s acquisition of Boyd Gaming’s (NYSE:BYD) 5% equity stake in FanDuel. Boyd Gaming, currently valued at $6.47 billion with a P/E ratio of 13x, has demonstrated strong performance with an 18.29% year-to-date return. According to InvestingPro data, the company maintains impressive gross profit margins of 61.62%.
The transaction, announced Thursday, values FanDuel at approximately $31 billion and includes revisions to existing market-access agreements between Flutter and Boyd Gaming.
Based on consensus estimates, Citi calculates the deal values FanDuel at approximately 17.4x 2026 EV-EBITDA (enterprise value to earnings before interest, taxes, depreciation, and amortization).
Citi notes that DraftKings’ current enterprise value multiple is trading at approximately a 7% discount to the implied FanDuel valuation based on Thursday’s closing price.
The research firm points out that the FanDuel transaction is not an arm’s length deal given the existing strategic partnership between Flutter and Boyd Gaming, suggesting FanDuel might command a higher valuation in a fully independent transaction.
In other recent news, Boyd Gaming has announced the sale of its 5% equity interest in FanDuel Group to Flutter Entertainment for $1.755 billion in cash, with the deal expected to close in the third quarter of 2025. The company plans to use the proceeds primarily to reduce debt, return capital to shareholders, and invest in its properties. As part of the agreement, Boyd Gaming and FanDuel will revise their market-access agreements, extending them through 2038, which will provide Boyd with a fixed fee per state from FanDuel’s operations in several states. Boyd Gaming expects its Online segment to generate $50-$55 million in EBITDAR this year and about $30 million in 2026. Stifel has raised its price target for Boyd Gaming to $87 from $76 while maintaining a Hold rating, following the announcement of the asset sale. Additionally, analysts from Citizens JMP highlighted potential benefits from new tax legislation affecting tipped workers, which could boost Boyd Gaming’s revenue during the first and second quarters of the year. However, the tax exemption on tips is temporary, set to expire in 2028. Boyd Gaming’s strategic moves reflect its focus on maintaining a strong balance sheet and enhancing shareholder value.
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