DraftKings: Strategic Expansion in Prediction Markets Justifies Near-Term Margin Pressure and Supports Buy Rating

Jason Tilchen, an analyst from Canaccord Genuity, maintained the Buy rating on DraftKings. The associated price target remains the same with $54.00.

Jason Tilchen has given his Buy rating due to a combination of factors tied to DraftKings’ strategic expansion and valuation profile. He highlights the launch of the DraftKings Predictions app across 38 states and DC as an important growth initiative, with differentiated market offerings by state and a roadmap to broaden coverage into areas like entertainment and culture. The initial reliance on CME Group’s exchange, followed by plans to connect to additional exchanges and ultimately migrate volume to the newly acquired Railbird platform, is viewed as a way to improve product flexibility and enhance long-term unit economics.

Tilchen acknowledges that DraftKings’ increased investment in this new vertical, including spend on staffing, product development, marketing, and user acquisition, will pressure near‑term margins and has already led to a reduction in consensus earnings expectations for next year. However, he believes this front‑loaded spending is justified by the long‑term opportunity and notes that management will refine guidance as early unit economics become clearer. Despite the added uncertainty around short‑term profitability, Tilchen argues that the current share price already reflects these risks and still offers an attractive risk‑reward setup for investors with a longer time horizon. He supports his Buy rating with a $54 price target, derived from applying a 24x multiple to his FY26 adjusted EBITDA forecast and corroborated by a discounted cash flow analysis.

In another report released today, Needham also maintained a Buy rating on the stock with a $52.00 price target.