MoffettNathanson analysts led by Robert Fishman have downgraded Boston-headquartered DraftKings (DKNG) to “Neutral,” cutting their price objective sharply to $27.
According to them, attractive valuations on conservative long-term forecasts are not sufficient anymore to justify a buy recommendation, especially after DKNG’s recent slip below its 50-day MA.
At the time of writing, DraftKings stock is down more than 35% versus its year-to-date high.
Why Did MoffettNathanson Turn Dovish on DKNG Stock
MoffettNathanson trimmed its estimates for DKNG shares mostly because of rapidly intensifying competitive threat from prediction markets.
CFTC-regulated platforms such as Kalshi and the crypto-native Polymarket have been pulling event-contract volume away from traditional regulated sportsbooks, creating a structural overhang.
The investment firm explicitly stated that clouds will remain on DraftKings until policymakers define clear boundaries for prediction markets.
And while DKNG has responded to the competitive threat by investing heavily in its own federally regulated event-contracts platform (DraftKings Predictions), the associated spending will pressure near-term profits, as evidenced in the 2026 guidance.
Note that the online gambling and sports entertainment company does not currently pay a dividend either.
DraftKings Shares Are Trading At a Premium
DraftKings’ weaker-than-expected revenue guidance for up to $6.9 billion this year is particularly concerning, given the stock is trading at a premium valuation of over 40x earnings currently.
Meanwhile, multiple states are considering tax hikes on gaming operators to shore up fiscal deficits, which may prove another major headwind for DKNG as the year unfolds.
Investors should also note that despite year-to-date weakness, DraftKings shares have their relative strength index (RSI) hovering around 50, indicating significant further room for downside.
These technical and fundamental risks are even reflected in insider transactions, with management recording roughly three times as many sales as buys over the past six months.
How Wall Street Recommends Playing DraftKings
On the flip side, other Wall Street analysts disagree with MoffettNathanson on DKNG stock.
According to Barchart, the consensus rating on DraftKings currently sits at “Moderate Buy,” with the mean price target of nearly $34 indicating potential upside of roughly 45% from here.
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On the date of publication, Wajeeh Khan did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
