Truist Securities announced a reduction in its price target for DraftKings Inc. (NASDAQ: DKNG), lowering the target to $33 from $45 while keeping a Buy recommendation. At the time of Truist’s adjustment DraftKings was trading around $21.30, a level just 1% above its 52-week low of $21.01, and meaning the new target still implies a material upside from current market prices.
The analyst move followed DraftKings’ fiscal fourth-quarter 2025 results and the company’s accompanying guidance. DraftKings reported an EPS of $0.25 for the quarter compared with a consensus forecast of $0.18, and revenue of $1.99 billion versus a consensus estimate of $1.98 billion. Despite the quarter’s upside, the company issued conservative guidance for the coming year that Truist characterized as soft.
Truist highlighted several financial metrics that remain supportive even as the firm trimmed projections. InvestingPro data cited by Truist show DraftKings retaining sizable gross profit margins of 76.11% and having delivered profitability over the last twelve months. Nonetheless, management signaled during the earnings call that the conservative guidance was intentionally aggressive on the downside with the goal of engineering a beat-and-raise cadence later in the year.
According to Truist, the market reaction to the guidance was a principal factor behind the recent sell-off. The firm also pointed to uncertainty in prediction markets and investor concerns about potential increases in state-level taxes as contributing to the decline. The stock fell 19.76% in the most recent week and has dropped 59.32% over the trailing 12 months, a price action Truist and InvestingPro flagged while noting that the shares may be undervalued on certain metrics.
On modeling, Truist trimmed its 2026 EBITDA estimate by 4%, moving the projection to the high end of the company’s guided range. The firm said it will refrain from additional estimate revisions until DraftKings presents more detail at its analyst day scheduled for March 2. Truist described the lowered price target as reflecting reduced valuation multiples and a broader market re-rating.
The Truist action is part of a broader pattern of target adjustments among sell-side firms following the quarter. TD Cowen cut its price target to $30 from $45 while keeping a Buy rating and pointed to expansion costs that could mute near-term benefits. Bernstein SocGen Group reduced its target to $28 from $32 and flagged concerns about growth visibility while maintaining an Outperform rating. Guggenheim lowered its target to $37 from $42, noting that DraftKings’ revenue was slightly below the firm’s internal estimates but in line with consensus expectations.
Collectively, these analyst moves illustrate a mixed reception to DraftKings’ latest financials: solid near-term results paired with a cautious tone on the outlook that has prompted analysts to re-evaluate valuation assumptions and growth trajectories. Investors will be watching the company’s March 2 analyst session for further clarity that could prompt another round of estimate revisions.
Key points
- Truist cut its DraftKings price target to $33 from $45 but maintained a Buy rating; the target implies meaningful upside from the roughly $21.30 share price.
- DraftKings beat Q4 EPS and revenue estimates, reported a 76.11% gross profit margin, and achieved profitability over the last twelve months, yet issued conservative guidance.
- Other firms including TD Cowen, Bernstein SocGen Group, and Guggenheim also lowered targets, reflecting mixed analyst sentiment and re-pricing of valuation multiples.
Risks and uncertainties
- Conservative company guidance could continue to pressure the stock if investor expectations remain unmet - affecting the gaming and consumer discretionary sectors.
- Regulatory and tax developments at the state level could increase costs or compress margins, posing a risk to profitability and valuation in the gambling sector.
- Ongoing uncertainty in prediction markets and overall market sentiment may keep volatility elevated for DraftKings and related gaming equities, influencing financial market performance.