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On Monday, Goldman Sachs reiterated a Buy rating on DraftKings Inc. (NASDAQ:DKNG) with a steady price target of $59.00, well above the current trading price of $36.23. According to InvestingPro analysis, the stock appears undervalued based on its Fair Value metrics, with analyst targets ranging from $36 to $74. The firm’s analysis followed the release of DraftKings’ first quarter financial results for 2025, acknowledging a period marked by customer-friendly sports outcomes, particularly in NCAA Basketball during March, which had an adverse effect on the company’s revenue and EBITDA. Despite these outcomes, DraftKings described the volatility as random and not indicative of a larger trend.
DraftKings adjusted its full-year 2025 guidance, now expecting revenue to be between $6.2 billion and $6.4 billion, a decrease from the previous forecast of $6.3 billion to $6.6 billion. This follows the company’s strong revenue growth of 22.86% over the last twelve months, reaching $5 billion. The projection for adjusted EBITDA was also revised, with the new range being $800 million to $900 million, down from the prior estimate of $900 million to $1 billion. Goldman Sachs noted that this adjustment was anticipated by investors ahead of the earnings announcement.
The resilience of online gambling during past economic downturns, such as the Global Financial Crisis, was cited by DraftKings management as a reason for confidence in the company’s positioning amidst a changing macroeconomic environment. InvestingPro data reveals several positive indicators, including expected sales growth and net income improvement for the current year. Additionally, the company’s core value drivers were reported to be progressing positively, with new customer acquisition meeting expectations, a structural increase in sportsbook hold, and more efficient promotional reinvestment. Get access to 10+ additional InvestingPro Tips and comprehensive analysis through the Pro Research Report.
DraftKings also demonstrated its capacity and readiness to return capital to shareholders, having repurchased approximately $140 million in stock during the quarter, with around $800 million remaining in its buyback program. This action underscores the company’s ongoing free cash flow increase, with levered free cash flow reaching $359.35 million in the last twelve months. Goldman Sachs’ maintained price target reflects a consistent outlook on the stock’s performance over the next 12 months.
In other recent news, DraftKings Inc. reported its first-quarter 2025 earnings, revealing a miss in both revenue and adjusted EBITDA compared to analyst forecasts. The company posted $1.4 billion in revenue and $103 million in adjusted EBITDA, which were 5% and 16% below consensus expectations, respectively. Despite these results, DraftKings revised its full-year 2025 revenue guidance to a range of $6.2-$6.4 billion, down from previous estimates. BMO Capital Markets adjusted its price target for DraftKings to $64 from $65, while maintaining an Outperform rating, citing the company’s long-term market potential. Analysts at Stifel also maintained a Buy rating with a $53 price target, noting improved structural hold expansion and promotional discipline as potential upsides for the fiscal year 2025. Citizens JMP kept its Market Outperform rating and a $54 price target, despite the earnings miss, emphasizing the company’s strong business fundamentals. DraftKings continues to face challenges from regulatory changes in Maryland and mandated exits from Texas and New Mexico, but remains focused on promotional efficiency and market expansion. The company is also integrating recent acquisitions and focusing on AI to enhance its operations.
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