Overview
Guggenheim has trimmed its price target on DraftKings Inc. (NASDAQ: DKNG) to $37.00 from $42.00, according to its Friday note, but maintained a Buy rating following the operator's fourth-quarter disclosures and initial commentary on 2026. The analyst action came after DraftKings reported quarterly results that presented a mix of beats and near-misses versus estimates and a company outlook that Guggenheim views as a conservative baseline for 2026.
Quarterly performance details
DraftKings reported fourth-quarter revenue of $1,989 million, an increase of 43% year over year. That top-line figure was slightly below Guggenheim's internal estimate of $2,043 million but essentially matched consensus expectations of $1,990 million. Management noted that the quarter benefited from $50 million in positive outcomes and easier year-over-year comparisons due to negative NFL outcomes in the fourth quarter of 2024.
Adjusted EBITDA for the quarter came in at $343 million, outpacing both Guggenheim's projection of $300 million and the consensus forecast of $272 million. Guggenheim attributed this outperformance to an 8% Sportsbook revenue margin, the aforementioned positive outcomes, and lower-than-expected spending on DraftKings Predictions, the company's newer product.
Analyst forecast revisions
Guggenheim analyst Curry Baker lowered the firm's 2026 revenue and adjusted EBITDA forecasts to $6.87 billion and $854 million, respectively. Those revisions reflect DraftKings' initial 2026 outlook, which Guggenheim believes serves as a conservative starting point for modeling. The analyst emphasized that consumer demand for DraftKings' products appears intact with no discernible macroeconomic impact evident to date.
Guggenheim also noted management's continued focus on cost discipline and operational efficiencies, and the firm expects the company to remain active with share repurchases.
Additional reported metrics and market reaction
In the company-reported fiscal Q4 2025 results, DraftKings posted earnings per share of $0.25, beating the $0.18 consensus by 38.89%. Revenue was reported at $1.99 billion, slightly above the anticipated $1.98 billion. Despite these favorable earnings beats and a stronger-than-expected adjusted EBITDA, DraftKings' stock experienced a notable decline following the earnings release.
There are currently no updates regarding mergers or acquisitions involving DraftKings. Analyst coverage has not seen recent upgrades or downgrades tied to this release, and other company developments have not been highlighted in recent reports.
Takeaway
Guggenheim's move to lower its price target while retaining a Buy rating reflects a recalibration of forward expectations in light of DraftKings' initial 2026 outlook rather than a change in conviction about the company's near-term demand dynamics. The quarter produced stronger-than-expected adjusted EBITDA and an EPS beat, but the combination of a slightly softer top-line versus Guggenheim's estimate and a conservative company outlook contributed to the analyst's revised modeling and target.
Key points
- Guggenheim cut its DraftKings price target to $37 from $42 but left the Buy rating intact.
- Q4 revenue was $1,989 million (43% y/y), slightly below Guggenheim's estimate but in line with consensus; adjusted EBITDA exceeded both Guggenheim and consensus estimates.
- Guggenheim lowered 2026 revenue and adjusted EBITDA forecasts to $6.87 billion and $854 million, viewing the company's own 2026 outlook as conservative.
Risks and uncertainties
- Near-term stock volatility - The shares fell after earnings despite several beats, indicating market sensitivity to guidance and estimates.
- Forecast risk - Guggenheim revised 2026 estimates downward, highlighting uncertainty in modeling future revenue and adjusted EBITDA.
- Dependence on event outcomes - Quarterly results were influenced by a $50 million positive outcomes adjustment and by comparative NFL results from the prior year.