DraftKings stock maintains Buy rating at Stifel despite tax headwinds

Investing.com - DraftKings Inc. (NASDAQ:DKNG) maintained its Buy rating and $51.00 price target at Stifel despite emerging tax and regulatory challenges. The stock, currently trading at $45.18, has demonstrated strong momentum with a 49.97% return over the past year. According to InvestingPro analysis, the company appears slightly undervalued based on its Fair Value estimate.

The sports betting company reported second-quarter adjusted EBITDA that exceeded expectations by 24%, which Stifel attributed to favorable sporting outcomes and modest core business improvements. The company has maintained impressive revenue growth of 25.8% over the last twelve months, with InvestingPro data showing strong financial health metrics. Despite this outperformance, DraftKings reiterated its full-year 2025 guidance, citing offsetting factors including Missouri launch costs and tax increases in Illinois, Louisiana, and New Jersey.

Management provided clarity on 2026 expectations, projecting adjusted EBITDA between $1.2 billion and $1.4 billion. This range aligns with Stifel’s recently revised estimates but falls below what some investors may have anticipated given organic growth since late 2023.

Stifel analyst Jeff Stantial maintained his long-term positive outlook, stating that total addressable market runway can offset tax increases and regulatory headwinds at current valuation levels. However, he advised a more cautious near-term approach given the stock’s three-month outperformance, potential sell-side estimate revisions, and underappreciated tax increase risks in the second half of 2025.

Stifel slightly lowered its fiscal year 2025 and 2026 adjusted EBITDA estimates for DraftKings while maintaining the $51 price target.

In other recent news, DraftKings Inc. reported its Q2 2025 earnings, significantly surpassing analyst expectations. The company achieved an earnings per share (EPS) of $0.38, which was well above the forecasted $0.13, representing a surprise of 192.31%. Revenue for the quarter reached $1.51 billion, exceeding the anticipated $1.4 billion. These results highlight a strong performance for DraftKings in the recent quarter. Analyst firms have taken note of these developments, though specific upgrades or downgrades were not mentioned. The company’s financial outcomes are a key focus for investors, given the better-than-expected earnings and revenue figures. These recent developments may influence investor sentiment and future analysis of DraftKings.

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