Citizens reiterates DraftKings stock rating despite expected weak quarter

Investing.com - Citizens has maintained its Market Outperform rating and $51.00 price target on DraftKings Inc. (NASDAQ:DKNG), currently trading at $33.62, despite expectations of disappointing upcoming quarterly results. Analyst targets range from $30 to $69, reflecting mixed sentiment on Wall Street.

With earnings due on October 31 and eight analysts recently revising their earnings estimates downward according to InvestingPro, the investment firm anticipates DraftKings will report "a fairly negative quarter," with both sports betting and iGaming revenue likely to fall short of market expectations.

Citizens also expects guidance for 2025 to be reduced when the company releases its results, adding pressure to the online gambling provider’s near-term outlook.

Despite these concerns, Citizens views the current valuation as "an additional buying opportunity," noting that DraftKings stock is trading at less than 10 times the consensus 2027 estimated EBITDA.

The firm’s $51 price target is based on a blended valuation using 15 times its 2027 estimated EBITDA and 17 times its projected free cash flow for 2026-2027.

In other recent news, DraftKings Inc. announced the acquisition of Railbird Technologies Inc., expanding its operations into the prediction markets space. This move allows DraftKings to offer regulated event contracts on various outcomes through a new mobile application called DraftKings Predictions, set to launch soon. Analyst firm Berenberg has upgraded DraftKings’ stock rating from Hold to Buy, citing solid growth and margin expansion as key reasons, although the price target was slightly lowered to $43.00. Meanwhile, Mizuho has adjusted its price target for DraftKings to $54.00, maintaining an Outperform rating despite recent fluctuations in the company’s stock value. DraftKings has also alerted its customers about account breaches resulting from credential stuffing attacks, which the company is actively investigating. The security incident was detected on September 2, leading to unauthorized access to some customer accounts. These developments reflect DraftKings’ strategic moves and challenges as it navigates new market opportunities and addresses security concerns.

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