Macquarie Trims Price Targets on Sports Betting Stocks Ahead of Q3 Earnings

Ahead of the start of third-quarter earnings season, Macquarie analyst Chad Beynon slightly reduced price targets on sports betting stocks, including the marquee duo of DraftKings (NASDAQ: DKNG) and Flutter Entertainment (NYSE: FLUT), but he remains mostly sanguine on the group.

Third-quarter results from the online sports betting giants and smaller rivals could be decent thanks to the effects of the World Cup in July and early momentum in the 2026 NFL season — two factors that could offset the seasonal lethargy experienced in August.

The analyst’s new price target on DraftKings is $34, down from $38, while his call on FanDuel owner Flutter is $128, down from $150. While those are obviously reductions, the new price objectives still imply significant potential upside for the slumping sports betting stocks.

Prediction Markets Loom Large for Sports Betting Stocks

There’s no getting around the fact that prediction markets will have some impact on sports betting operators into year-end and related commentary on upcoming earnings calls is likely to be a point of emphasis for analysts and institutional investors.

“Prediction market to reach new highs in September at ~$19 billion taker volume (+1035% YoY), driven by the start of football (NFL + College) and building off the FIFA World Cup tailwind,” adds Beynon. “Specifically, prediction markets generated $4.3 billion of taker volume in the first week of September without any NFL games, and set a daily record on the opening Sunday of the NFL (Sept. 13) with $802 million.”

Both DraftKings and Flutter are making sizable investments in their prediction markets with it recently highlighting soaring volume on its DKeX exchange and waxing bullish on the long-term prediction market opportunity set.

However, some industry insiders note that yes/no exchanges are upping their customer acquisition enticements, potentially putting sportsbook operators in an uncomfortable economic position as they seek to defend their turf.

Gaming Stocks Mired in Slumps

Gaming equities, including sports betting stocks, are slumping this year for a variety of reasons, including high inflation, softness in Macau and still tepid visitation to the Las Vegas Strip. However, there are some pockets of opportunity.

Beynon highlights Penn Entertainment (NASDAQ: PENN) and Red Rock Resorts (NASDAQ: RRR) as offering two of the best set ups among regional casino stocks ahead of third-quarter earnings season. The analyst’s preferred  Las Vegas Strip name is Wynn Resorts (NASDAQ: WYNN), which he rates outperform with a $132 price target.