DraftKings Faces Three Analyst Downgrades — JPMorgan Says It’s ‘Increasingly Difficult To Recommend’ The Stock

UBS lowered its rating on DraftKings to ‘Neutral’ from ‘Buy’ and cut its price target to $22 from $48, according to The Fly.

• JPMorgan cut its price target to $21 from $30 and removed DraftKings from its Analyst Focus List, saying it has little conviction in the company's FY2027 and FY2028 EBITDA outlook, TheFly reported.
• UBS said it is difficult to assign meaningful value to DraftKings' prediction markets business given the uncertain regulatory outlook, according to The Fly.
• 31 out of 37 analysts covering the stock rate it ‘Buy’ or ‘Strong Buy,’ whereas five rate it ‘Hold’ and one rates it ‘Strong Sell,’ according to Koyfin.

DraftKings (DKNG) shares drew investor attention on Monday after UBS, JPMorgan and Stifel downgraded the sports betting company, citing concerns over slowing growth, profitability and its prediction markets business.

UBS lowered its rating to ‘Neutral’ from ‘Buy,’ while JPMorgan downgraded the stock to ‘Neutral’ from ‘Overweight,’ according to TheFly.

DKNG shares traded 1.19% lower in premarket trading at the time of writing, following a 21.3% plunge in the previous session.

Thirty-one out of 37 analysts covering the stock rate it ‘Buy’ or ‘Strong Buy,’ whereas five rate it ‘Hold’ and one rates it ‘Strong Sell,’ according to Koyfin. Their 12-month price target ranges from $20 to $58, with an average of $31.17.

JPMorgan Sees Deteriorating Earnings Visibility

JPMorgan analyst Daniel Politzer lowered his price target on DraftKings to $21 from $30 and removed the stock from the firm's Analyst Focus List, according to TheFly. This new price target implies around 13.5% upside from DraftKings' last closing price of $18.51 on Nov. 6.

Following the company's third-quarter results, Politzer said the firm has little conviction in DraftKings' fiscal 2027 and 2028 earnings before interest, taxes, depreciation, and amortization (EBITDA) outlook, adding that it is "increasingly difficult to recommend the stock,” according to TheFly.

JPMorgan also said the online sports betting ecosystem is becoming less rational as competitors use promotions to drive growth, according to The Fly. The firm believes this is making DraftKings' earnings visibility increasingly uncertain.

UBS Flags Prediction Markets Valuation Concerns

Separately, UBS analyst Robin Farley lowered the firm's price target on DraftKings to $22 from $48, according to TheFly. This implies around 19% upside from DraftKings' last closing price on Friday.

UBS said it is difficult to assign meaningful value to DraftKings' prediction markets business given the uncertain regulatory outlook, according to The Fly.

The analyst noted that valuing DraftKings based solely on its core business, excluding $1 billion in prediction markets losses, implies a valuation at the low end of the stock's historical range, given the company's reduced outlook and slower sales growth.

UBS also expects mid-single-digit to high-single-digit revenue growth for DraftKings' core business, with its Neutral rating based on a 10-12x EV/EBITDA multiple, both in line with the company's core business guidance. However, the firm cautioned that its growth assumptions could prove optimistic given decelerating topline growth, according to a report published by Investing.com.

Stifel Calls DraftKings A ‘Show-Me Story’

Earlier, Stifel analyst Jeffrey Stantial downgraded DraftKings to ‘Hold’ from ‘Buy’ and lowered his price target to $21 from $32, according to TheFly. The revised price target implies around 13.5% upside from the stock's last closing price on Friday.

Stantial said the company's decision to invest aggressively in prediction markets is "strategically sound." However, he noted that the "optics are challenging" and expects it will take "many quarters of proven execution" before investors are willing to underwrite returns on the investment, given significant legal, regulatory, and competitive uncertainty, TheFly reported, adding that Stifel now views DraftKings as a “show-me story.”

How Retail Views DKNG

On Stocktwits, retail sentiment around the stock remained in the ‘extremely bullish’ territory with ‘extremely high’ message volumes in the past 24 hours.

DKNG shares have dropped over 46% year-to-date.

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