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Investing.com - BofA Securities raised its price target on DraftKings Inc. (NASDAQ:DKNG) to $50.00 from its previous target while maintaining a Buy rating on the sports betting company. According to InvestingPro data, DraftKings currently trades at $43.75 with a market capitalization of $21.8 billion, and analysis suggests the stock is currently undervalued.
The investment bank expects DraftKings to report better-than-expected second-quarter results when it announces earnings on July 31, driven by favorable sports betting margins during May and June. BofA has increased its Q2 revenue estimate to $1.50 billion, which is 6% above the consensus estimate of $1.41 billion. This optimism aligns with InvestingPro data showing strong revenue growth of 22.86% over the last twelve months, with four analysts recently revising their earnings estimates upward. Get deeper insights with InvestingPro’s comprehensive research report, available for over 1,400 US stocks.
BofA also projects Q2 EBITDA of $290 million, exceeding Wall Street’s expectations of $233 million by 24%. The firm anticipates DraftKings will reiterate its full-year 2025 guidance following the expected strong quarterly performance.
Looking ahead to 2026, BofA has adopted a more conservative outlook than DraftKings’ previously announced target of $1.4 billion in EBITDA. The bank forecasts $1.26 billion in 2026 EBITDA, accounting for approximately $30 million in tax headwinds from New Jersey, Maryland, and Louisiana in the first half of the year.
BofA’s 2026 projections also factor in an estimated $40-50 million in launch costs for Alberta operations in the first half of 2026, along with more modest gross margin expansion to accommodate potential additional tax headwinds in the second half of that year.
In other recent news, DraftKings Inc. has been the focus of several developments that may interest investors. Mizuho (NYSE:MFG) reiterated its Outperform rating with a $58.00 price target, citing the company’s market share gains in New York and a favorable hold rate, which could positively impact Q2 EBITDA. Meanwhile, Benchmark raised its price target to $50.00, highlighting potential acquisition talks with Railbird Exchange, a federally licensed prediction market platform. This acquisition could provide DraftKings with a scalable entry into underpenetrated states. Citi also maintained a Buy rating and $58.00 price target, noting that DraftKings trades at a discount compared to FanDuel, which was recently valued higher in a transaction involving Boyd Gaming (NYSE:BYD). Mizuho echoed this sentiment, suggesting DraftKings is undervalued relative to FanDuel despite similar U.S. market shares. Additionally, JMP Securities reiterated a Market Outperform rating with a $50.00 price target, dismissing concerns about legislative impacts on the sports betting industry. These recent developments reflect the varied perspectives and analyses of DraftKings’ current market position.
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