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On Friday, Stifel analysts maintained a positive outlook on DraftKings Inc. (NASDAQ:DKNG) stock, reiterating a Buy rating and a $53.00 price target. The firm’s analyst pointed to the company’s adjusted EBITDA guidance, which was 6% below consensus. The lower guidance results from less favorable outcomes than expected during March Madness, as well as a $26 million impact from regulatory changes in Maryland and mandated exits from Texas and New Mexico due to Jackpocket operations. According to InvestingPro data, DraftKings, currently valued at $17.89 billion, shows potential despite its current EBITDA of -$202.32 million over the last twelve months.
Despite these setbacks, DraftKings identified an additional $37 million in potential upside to its fiscal year 2025 adjusted EBITDA. This increase is attributed to improved structural hold expansion and promotional discipline. The analyst’s commentary suggests that concerns regarding the downside risk to the company’s 2025 guidance—stemming from a slowdown in market-wide same-store handle growth—have been somewhat alleviated following a report from Flutter Entertainment (FLUT). InvestingPro analysis reveals strong revenue growth of 22.86% and forecasts continued sales expansion, with analysts expecting profitability this year.
DraftKings’ ability to improve structural hold and promotions is seen as incremental and aligns with Stifel’s "beat and raise" thesis. The firm expects that, assuming other factors remain constant, the stock will likely see a favorable reaction from investors the following day. The analyst concluded that the model and the $53 target price are currently under review, indicating that there may be adjustments based on the latest developments.
The assessment from Stifel comes after a detailed analysis of DraftKings’ financial outlook and market conditions. The sports betting company, which is navigating a rapidly changing regulatory landscape, has managed to identify areas of potential growth and improvement despite facing challenges that have affected its earnings guidance. DraftKings’ strategic focus on promotional efficiency and market expansion is a central part of Stifel’s continued endorsement of the stock. InvestingPro analysis indicates the stock is currently undervalued, with analyst targets ranging from $35 to $74 per share. For deeper insights into DraftKings’ valuation and growth potential, investors can access the comprehensive Pro Research Report, available exclusively to InvestingPro subscribers.
In other recent news, DraftKings Inc. reported its first-quarter 2025 earnings, which fell short of market expectations. The company posted an earnings per share (EPS) of $0.12, missing the forecasted $0.20, and revenue of $1.41 billion, below the anticipated $1.46 billion. Despite the earnings miss, DraftKings saw a 20% year-over-year revenue increase, driven by a 16% rise in sportsbook handle. The company has revised its full-year 2025 revenue guidance to between $6.2 billion and $6.4 billion, slightly down from earlier estimates. BMO Capital Markets adjusted its price target for DraftKings to $64 from $65, maintaining an Outperform rating, highlighting the company’s long-term potential in the digital gaming sector. DraftKings continues to focus on integrating recent acquisitions and expanding its live betting offerings, which now constitute over 50% of its total handle. The firm also anticipates Q2 revenue to grow by approximately 25% year-over-year, with adjusted EBITDA projected to exceed $200 million. Despite the challenges, BMO Capital remains optimistic, citing DraftKings’ resilience amid macroeconomic uncertainties.
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