Citizens maintained its Market Outperform rating on DraftKings Inc. and preserved a $38.00 price target on the stock, which is trading around $22.31 and sits close to its 52-week low of $21.01. The firms assessment aligns with a broader consensus view that places the security below what analysts see as its fair value, with consensus targets implying roughly 57% upside from current levels.
Operationally, DraftKings showed a number of positive indicators during its recent reporting cycle. Non-NFL handle was reported to be up by double digits as of the company's February 13 investor call, and overall handle rose 4% in January. Over the trailing twelve months, revenue has expanded by 27%, while gross profit margin has held at a robust 76%.
Analyst notes accompanying the rating emphasize expectations that net income will grow this year and that the company is projected to reach profitability. Those points are among a broader set of insights that analysts use to evaluate the business and its trajectory.
Seasonality and calendar effects were highlighted as near-term headwinds for the sports betting market. The Olympic Games are expected to exert a negative impact on the industry during the relevant period, and the National Hockey League is on a longer break this February - 19 days this year versus 12 days last year when the Frozen Four occurred. While the NHL will still play the same number of games over the season, the schedule has a higher concentration of contests before and after the multi-week breaks than in a normal year. That timing should support an acceleration of handle late in February and through March as more games are played.
Margins in gaming were mixed on a year-over-year basis in January, which translated into a slightly negative monthly performance overall. By contrast, gaming margins for the Super Bowl were stronger than expected across the sports betting industry; the Super Bowl accounted for approximately 11% of handle for the month, and the better-than-expected margins there are considered a net positive for the quarter.
DraftKings fourth-quarter results beat expectations, but the company's forward guidance has been described by analysts as soft. That cautious guidance prompted several firms to lower their price targets.
- Stifel cut its target to $40 from $44, citing concerns about promotional costs and expressing skepticism about the company's guidance.
- Truist Securities reduced its target to $33 from $45 while maintaining a Buy rating, attributing the change to the soft guidance.
- TD Cowen adjusted its target to $30 from $45, pointing to costs tied to expansion efforts.
- Bernstein SocGen Group lowered its price target to $28 from $32, noting concerns around growth visibility.
In a separate development, company director Harry Sloan purchased 100,000 shares in an insider transaction valued at approximately $2.19 million.
The picture presented by these data points and analyst moves is mixed: strong unit economics and high gross margins sit alongside soft forward guidance and investor concern about promotional and expansion-related costs. Investors weighing DraftKings will need to balance near-term guidance and cost pressures against continued growth in handle and a substantial gross margin profile.