On Wednesday, Susquehanna analysts revised their outlook on shares of DraftKings Inc. (NASDAQ:DKNG), reducing the price target to $54 from the previous $56 while maintaining a Positive rating on the company's shares.
With a current market capitalization of $18.2 billion, DraftKings has seen analyst targets ranging from $35 to $77, according to InvestingPro data. The adjustment follows a December that proved to be challenging for bookmakers, prompting a reassessment of DraftKings' fourth-quarter revenue and EBITDA estimates.
The firm now expects DraftKings to report fourth-quarter revenue of $1.4 billion and EBITDA of $81 million, a decrease from the initial projections of $1.525 billion and $168 million, respectively. This comes as the company has demonstrated strong revenue growth of 40% over the last twelve months, reaching $4.6 billion.
According to Susquehanna, the unfavorable NFL hold in December necessitated the revision of their estimates. Despite the change in short-term expectations, the analysts have decided not to alter their projections for 2025 and 2026, attributing the current situation to the volatility of sports outcomes.
The analysts noted that the NFL results this season have deviated from historical patterns, which has led investors to adopt a more cautious stance. There is a growing concern that sports outcome volatility may be higher than previously anticipated, especially given DraftKings and FanDuel's efforts to encourage a higher mix of parlay betting.
Susquehanna reaffirmed their positive stance on DraftKings, pointing out that while they have lowered their estimates for the fourth quarter, they have maintained their forecasts for the company's performance in 2025. This includes the anticipated market launch in Missouri on September 1, 2025.
According to InvestingPro analysis, which shows the stock is currently undervalued, analysts expect the company to become profitable this year with a forecasted EPS of $0.27. Despite the recent unfavorable sports results, the analysts believe that the outcomes will normalize over time, although investors may remain wary until a consistent pattern emerges.
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