DraftKings rallies after BofA turns bullish on the 2027 setup
DraftKings (DKNG) is on watch after Bank of America upgraded the sports betting stock to a Buy rating after having it slotted at Neutral.
Analyst Julie Hoover noted the firm has been on the sidelines on DraftKings (DKNG) for the past year due to a challenging event path from prediction markets and material estimate risk but now sees prediction markets as a win-win, less cannibalization risk, a bottoming of Street earnings estimates on DKNG, and a favorable risk-reward profile on DKNG with shares down -47% in the past year.
"While we see a favorable setup into 2027, we would like to see stronger cost discipline within the core business to support higher incremental margins and flow-through in 2028 and beyond," highlighted Hoover.
Bank of America's price objective of $27 is based on a 12X multiple to the 2027 EV/EBITDA estimate. The price objective implies upside potential of more than 40% for DraftKings (DKNG).
Shares of DraftKings (DKNG) jumped 4.9% in premarket trading to $19.51. The 52-week high for the stock is $36.98.
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