DraftKings saw stock price target raises from several Wall Street firms following its strong fourth quarter earnings and affirmed outlook for 2025.
DraftKings stock opened the week at $54.15, up 16% from when it reported earnings last Thursday and a 176-week high as it reported a revenue beat and reaffirmed guidance for 2025. DKNG gave some of that growth back, though, as the stock closed Monday at $51.49.
Both Macquarie and Truist analysts were most optimistic about DKNG’s prospects, increasing their price targets to $60, citing higher margins, lower promos and continued market leadership. Other banks, meanwhile, were less optimistic but still encouraged by the results.
Macquarie, Truist highest on DraftKings stock
Macquarie highlighted the company’s higher hold rates and strong operational execution despite challenges like unfavorable NFL betting outcomes.
DraftKings posted a 6% EBITDA beat for Q4, signaling that its customer engagement and operational efficiency are on track, according to Macquarie.
The recent acquisition of Jackpocket, a lottery courier app, was another factor analysts noted for its ability to diversify DraftKings’ customer base and offset sports betting headwinds.
Truist analysts echoed Macquarie’s optimism, highlighting DraftKings’ ability to capitalize on industry growth and operating leverage. Truist was particularly bullish on investments in live betting and micro-markets, areas that are expected to drive future expansion and profitability in the long term.
Sports results trending up
Structural sportsbook hold grew 0.8 percentage points year over year to 11.2%, Macquarie noted, while NFL parlay handle mix increased by 6 percentage points, reflecting the ongoing refinement of DraftKings’ product offerings.
That came despite one of the most unfavorable seasons of NFL betting ever, an industry-wide headwind. According to analysts, the company’s January and February sports hold metrics set the stage for a strong Q1, reinforcing confidence in DraftKings’ 2025 outlook.
“DraftKings’ 40% jump in same-game parlay [Super Bowl] handle drove 1Q parlay-mix improvement, with favorable implications for EBITDA margins not shown in guidance,” Brian Egger, a senior gaming and lodging industry analyst with Bloomberg Intelligence, added in a note. “The company’s sports hold — 11% in January and 13% for Feb. 1-11 — sets the stage for a favorable 1Q outcome.”
Stifel more cautious in DraftKings evaluation
Stifel raised its price target for DraftKings to $57 but tempered its outlook by removing the stock from its Select List despite maintaining its buy rating.
The firm acknowledged the company’s strong Q4 performance, including record-breaking Super Bowl profits, but warned that the upside for 2025 may be more modest than initially anticipated.
Despite this caution, Stifel sees long-term growth potential in DraftKings, particularly with improving promotional spending and structural hold expansion.
The firm also noted that while DraftKings’ live betting investments are a key area of focus, they are expected to have minimal EBITDA impact in 2025 but provide long-term prospects as a growth driver.
Deutsche Bank urges risks undervalued
Deutsche Bank took a more cautious approach, maintaining its “hold” rating as it maintained its $36 target.
The firm expressed concern that the market may be underestimating the risks facing DraftKings, particularly with the volatile nature of sports betting margins and regulatory pressures. Deutsche Bank pointed to the recent push for online gaming tax increases in states like Maryland, New Jersey, and Ohio as a potential risk to DraftKings’ profitability.
Additionally, the firm flagged competition from platforms that offer event-based betting products that could pose a threat to traditional sports betting, noting President Trump’s recent appointee to the Commodity Futures Trading Commission being a Kalshi board member.
DraftKings buys back debt
Truist analysts pointed to DraftKings’ strategic use of buybacks and its plans to explore debt markets as a sign of the company’s financial strength and ability to generate free cash flow.
DraftKings repurchased 1.14 million shares in December at an average price of $42.08.
The company has $952 million remaining on its $1 billion share repurchase program, signaling confidence in its cash flow generation, Truist said.
