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DraftKings shares rose about 5% after Bank of America upgraded the stock from Neutral to Buy and maintained a $27 price target, according to a Yahoo Finance report. The note said that target implies roughly 45% upside, even after a difficult stretch in which DraftKings stock has fallen 45% over the past year.
For readers who follow major sportsbook operators, the upgrade centered on two main points: Bank of America said recent worries around prediction markets and unfavorable NFL outcomes appear to be fading, and it argued the stock’s pullback may offer a more attractive entry point.
Bank of America sees longer-term value despite near-term estimate cut
Bank of America analyst Julie Hoover kept her $27 target, but adjusted parts of the firm’s profit outlook. The bank cut its 2026 EBITDA estimate to $500 million from $625 million after DraftKings’ CEO said spending on prediction markets could be “meaningfully” higher than first planned.
At the same time, Bank of America raised its 2027 EBITDA estimate to $1.15 billion from $1.05 billion. The report also said DraftKings is now the third-largest player in prediction markets.
If regulators allow those markets to remain in place, Bank of America estimates they could generate about $400 million in fees by 2027, with market-making potentially adding another $200 million to $400 million.
Recent DraftKings operating trends stayed positive
The report pointed to solid recent operating results from DraftKings’ core business. In the second quarter, the company posted $115 million in adjusted EBITDA, while customer acquisition grew nearly 75%.
More than 600,000 customers have also tried DraftKings’ Predictions product, according to the report. Management said the core business remains on track for about $1 billion in adjusted EBITDA this year, and DraftKings kept full-year revenue guidance at $6.5 billion to $6.9 billion.
Another point highlighted in the report: sportsbooks have grown faster than prediction markets since football season began.
What to watch next
The biggest open question is regulatory. Bank of America’s longer-term view depends in part on whether prediction markets are allowed to continue and how expensive it becomes for DraftKings to build that business. For sportsbook watchers, future updates on spending, margins, and the relative growth of betting versus prediction products will likely matter as much as the stock upgrade itself.
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Source: As reported by Aditya Raghunath.
