DraftKings Slide Provides Fresh Buying Opportunity, Says Analyst

Posted on: April 14, 2025, 03:33h. 

Last updated on: April 14, 2025, 03:33h.

Todd Shriber @etfgodfather Read More
Expertise: Financial, Gaming Business, Mergers and Acquisitions.
  • Shares have tumbled since fourth-quarter earnings report.
  • Stock is inexpensive relative to next-12-month sales history.

Shares of DraftKings (NASDAQ: DKNG) traded slightly higher Monday after an analyst upgraded the stock, noting said recent weakness could present investors with a valid buying opportunity.

DraftKings stock
DraftKings highlighted at the Nasdaq market site. The stock was upgraded by CFRA Research on Monday. (Image: NASDAQ)

In a new report, CFRA Research analyst Zachary Warring lifted his rating on the gaming stock to “buy” from “hold” while trimming his price target on the name to $52 from $53. Though it’s below the average price objective of $56.60, it implies upside of about 51.1% from where the stock trades at this writing. Warring added that the 30% slump experienced by DraftKings since it reported fourth-quarter results “provides a great entry point for shares.”

Shares are trading at 2.8x next-12-month (NTM) sales and well below its three- and five-year average. DraftKings and FanDuel are the two winners in mobile sports betting in the U.S., and we expect the two to maintain over 80% market share,” observed the analyst.

CFRA expects DraftKings will earn post 2025 earnings per share (EPS) of 50 cents followed by 75 cents in 2026, indicating the company is on track to become increasingly profitable while generating an impressive rate earnings growth.

DraftKings Has Some Tariff Resilience

Like other gaming stocks, DraftKings has recently been punished by President Trump’s tariff plans, but like rival Flutter Entertainment (NYSE: FLUT) — the parent company of FanDuel — DraftKings may have more recession/tariff resilience than meets the eye.

Unlike operators of brick-and-mortar casinos, DraftKings and its most direct rivals aren’t dependent on travel trends. Additionally, the core DraftKings customer is largely recreational, meaning they aren’t betting significant sums of money. That implies those clients can keep up their modest betting allocations even in a downbeat economy.

With those factors in mind, Warring noted DraftKings could be a defensive stock in a group rarely known for offering investors that perk.

“DKNG has no exposure to travel, unlike the large legacy Casinos, and should hold up better in a consumer slowdown,” added the analyst. “We upgrade shares and believe DKNG can be a defensive play within the Casinos and Gaming sub-industry.”

DraftKings Growth, Profitability Ahead

One of the long-standing issues surrounding online sports betting equities is the balancing act between marketing expenditures and profits. The former is essential in attracting and retaining customers, but it can be a drag on the latter.

With DraftKings and FanDuel controlling a nearly impenetrable duopoly in the industry on a domestic basis, those operators have the luxury of focusing on growth and profitability over marketing — something CFRA’s Warring believes DraftKings is doing.

“We see DKNG growing 30% in 2025 and becoming more profitable as the company pulls back on marketing expenses,” concluded the analyst.