Truist Securities lowered its price target on DraftKings Inc. (NASDAQ: DKNG) to $43.00 from $45.00 while maintaining a Buy rating, reflecting increased costs tied to the company’s expansion into prediction markets.
The analyst noted that DraftKings launched its prediction app in 38 U.S. states, including California, Florida, Georgia, and Texas, with FanDuel expected to roll out a similar offering shortly. Both companies were viewed as comfortable proceeding without jeopardizing their core state gaming licenses. However, Truist cautioned that unresolved legal challenges remained, with the possibility of a Supreme Court ruling still ahead.
Despite the uncertainty, the analyst believed DraftKings and Flutter Entertainment could outperform as regulatory clarity emerged, whether through restrictions or approval of sports contracts, though multiple risks persisted. Truist maintained its fourth-quarter EBITDA forecast at the midpoint of company guidance, or $500 million, pending additional state-level data.
For 2026 and 2027, the firm reduced EBITDA estimates by 22% and 18%, respectively, to $940 million and $1.60 billion. The revisions reflected the incremental costs associated with prediction markets, ESPN and NBC launches, and more conservative assumptions around betting handle and hold rates.
