Barry Jonas of Truist lowered his price targets on some key sports betting stocks ahead of their third quarter earnings releases.
Jonas cut his DraftKings target to $50 from $55 and lowered his target on FanDuel parent Flutter to $335 from $350 but maintained his buy rating on both companies. Both cuts come from lower EBITDA expected from unfavorable sports betting results, specifically the NFL betting results from September.
Jonas cut his Caesars target ($32, -$5) as well, though he notes his lower digital EBITDA forecast may be conservative.
New EBITDA expectations
DraftKings had the largest downward revision of the three companies with Jonas now forecasting a loss of $125 million EBITDA for the quarter based on a $172 million swing. Lower handle and hold accounts for $132 million of that with another $40 million lost on higher promotional spending, including the Ghost Leg promo.
Jonas also lowered DraftKings’ 2026 and 2027 estimates on lower expected handle and hold as well as the threat of new state taxes. He now expects EBITDA of $678 million (-18%) this year, $1.35 billion (-7%) for 2026 and $2.04 billion (-2%) for 2027.
Flutter is now expected to report $34 million in Q3 US EBITDA. Jonas estimates the lower handle and hold in September cost FanDuel around $100 million, but that was partially offset by a positive $30 million swing in online casino performance.
After accounting for higher taxes and Flutter’s India shutdown, Jonas now forecasts total EBITDA of $3.13 billion (-5%) this year, $4.31 billion (-4%) in 2026 and $5.08 billion (-2) in 2027.
For Caesars, Jonas lowered his expected sports betting EBITDA to $30 million from $75 million. Steve Wieczynski of Stifel expects Caesars to report a drag of around $39 million from those bettor-friendly September results.
Jonas: no impact from predictions
There is no upside or downside changes to any estimates because of prediction markets, Jonas noted. For now, the impact is “de minimus to date,” he said.
He is also not assuming any of his covered sports betting operators launch predictions, either. Flutter noted at G2E that sports predictions could be coming, but regulatory pressures may prevent that launch now that Nevada is on board with other states like Arizona, Michigan and Ohio.
“Since then, NV regulators have issued a notice suggesting negative ramifications for any licensee engaging in sports contracts,” Jonas said. “… We think FLUT values their licenses and regulator relationships, and would not look to proceed unless their legal counsel gave them enough comfort.”
BetMGM and Caesars are out on predictions until there is clarity on their legality, with BetMGM taking a strong stance on its Q3 earnings call and Caesars noting its preference in G2E meetings. Jonas expects data suppliers Genius Sports and Sportradar to stay on the sidelines of predictions until then as well.
Penn sports betting update
Jonas lightly tweaked Penn Entertainment‘s gaming EBITDA forecast to $382 million for the third quarter, down $8 million from his previous estimate.
More importantly for Penn will be the commentary about how ESPN Bet is performing given all of the recent updates. Its partnership with Disney can be ended next year, which analysts say is more and more likely without seeing growth for ESPN Bet in state reports.
“Management has been clear that 2026 will be profitable for its digital segment and there is optionality to revise, restructure, or even exit its ESPN agreement to help achieve that goal, in our view,” Jonas said.
