Online sports betting company DraftKings’ (DKNG) shares have plunged about 31% year-to-date following its earnings miss and below-consensus guidance for fiscal 2026. However, its shares rose over 3% on Wednesday afternoon after two analysts stepped out with a bullish call on DKNG, with Citizens noting that DraftKings is one of “the most attractive ways to own the online gaming sector.”
Claim 30% Off TipRanks
- Unlock hedge fund-level data and powerful investing tools for smarter, sharper decisions
- Discover top-performing stock ideas and upgrade to a portfolio of market leaders with Smart Investor Picks
‘More Constructive Operating Environment’
Citizens analyst Jordan Bender reaffirmed his Market Outperform (Buy) rating on DraftKings and maintained his price target of $34, which implies about 43% upside. The analyst noted that, on average, U.S.-listed online gaming companies have entered their second-quarters with their shares near their all-time lows, but he sees “a more constructive operating environment” emerging.
Bender sees this change being spurred by improving betting volumes, monetization of prediction markets, and more disciplined spending by the companies to improve their cost base. As a result of this and other factors, the analyst sees DraftKings, alongside peers Super Group (SGHC) and Rush Street Interactive (RSI), as the best vehicles to enter the online gaming market.
Morgan Stanley Flags Upside to Q1 Consensus
Similarly, Morgan Stanley maintained its Overweight (Buy) rating on DraftKings and set a price target of $40, which suggests about 67% upside. The banking giant noted that DraftKings holds the biggest upside potential to surpass analysts’ consensus outlook for companies in the gaming sector for their first-quarter results.
For instance, Morgan Stanley sees DraftKings generating about $195 million in earnings before interest, taxes, depreciation, and amortization, far ahead of Wall Street’s consensus of $175 million. The bank also believes that DraftKings has the potential to deliver a pickup in betting activities due to the upcoming FIFA World Cup.
Is DraftKings a Good Stock Buy?
Across Wall Street, DraftKings’ shares remain a Strong Buy based on analysts’ consensus rating. This breaks down into 25 Buys and six Holds issued by 31 analysts over the past three months.
In addition, the average DKNG price target of $34.83 implies about 47% upside from current trading levels.
