Stifel maintains Buy rating on DraftKings shares, target $53

On Monday, Stifel analysts, led by Jeff Stantial, maintained their Buy rating on DraftKings Inc. (NASDAQ: NASDAQ:DKNG) with a steady price target of $53.00. Stantial’s remarks followed DraftKings’ first-quarter results, which slightly exceeded expectations. The company, currently valued at approximately $18 billion, has demonstrated strong revenue growth of nearly 23% over the last twelve months. According to InvestingPro analysis, DraftKings is currently trading below its Fair Value, suggesting potential upside opportunity. Despite the company’s guidance for fiscal year 2025 being revised below Wall Street’s predictions due to adverse outcomes and one-time headwinds, Stantial highlighted several positive developments from the earnings call.

DraftKings has reportedly increased its handle share in tier-2 sports as a result of investments in live betting products. Additionally, the company’s iCasino Net Gaming Revenue (NGR) exit-rate for April indicated a potential rebound in market share momentum. Stantial also noted that Online Sports Betting (OSB) handle growth has been in line with expectations through April, countering concerns about a slowdown in overall market growth. InvestingPro data reveals the company maintains a moderate debt level with a current ratio of 1.2, suggesting adequate liquidity to support its growth initiatives.

Stantial’s analysis supports the initial "beat and raise" thesis for DraftKings, suggesting that the company’s reasonable valuation—based on mid-single to high-single-digit percent free cash flow yield estimates for 2026—provides a positive outlook. This outlook remains despite entering a seasonally slower period and facing a near-term legislative environment that may be perceived negatively. With a beta of 1.89, investors should note the stock’s higher volatility compared to the broader market. For deeper insights into DraftKings’ financial health and growth prospects, including 10+ additional ProTips, access the comprehensive Pro Research Report available on InvestingPro.

The fiscal year 2025 Adjusted EBITDA projection was slightly reduced by 2%, but the target price for DraftKings’ stock was reaffirmed at $53.00. Stantial’s commentary and Stifel’s rating reinforce their constructive stance on the stock as the company navigates through the current market landscape. The company’s Financial Health Score of 2.32 (FAIR) on InvestingPro aligns with analysts’ positive outlook, with consensus forecasts indicating profitability in the current year.

In other recent news, DraftKings Inc. reported first-quarter earnings for 2025, with revenue reaching $1.4 billion, marking a 20% increase year-over-year. However, this fell short of the consensus estimate of $1.429 billion. The company’s EBITDA was reported at $103 million, surpassing the consensus estimate of $98 million but below Guggenheim’s projection of $125 million. Following the earnings announcement, DraftKings revised its 2025 revenue forecast to between $6.2 billion and $6.4 billion, down from the previous range of $6.3 billion to $6.6 billion. Adjusted EBITDA guidance was also lowered to between $800 million and $900 million.

Guggenheim Securities, Goldman Sachs, and Stifel all maintained their Buy ratings on DraftKings, with price targets of $60, $59, and $53, respectively. BMO Capital Markets adjusted its price target to $64, maintaining an Outperform rating. The revisions in forecasts were attributed to customer-friendly sports outcomes during the NCAA Men’s Basketball Tournament and regulatory changes in certain states. Despite these challenges, analysts highlighted DraftKings’ strong underlying business fundamentals and its ability to improve promotional efficiency. Additionally, DraftKings repurchased approximately $140 million in stock during the quarter, indicating a focus on returning capital to shareholders.

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