BMO Capital Expresses Concern Over DraftKings' (DKNG) 2026 Guidance, Prediction Market Competition

DraftKings Inc. (NASDAQ:DKNG) is one of the best stocks under $50 to invest in. On February 13, BMO Capital analyst Brian Pitz lowered the firm’s price target on DraftKings to $42 from $50 while maintaining an Outperform rating. The analyst noted that the company’s 2026 guidance fell 8% below revenue and 20% below EBITDA estimates at the midpoint.

This guidance is discouraging despite management’s claims that prediction markets have a minimal impact on business. Additionally, the firm also suggested that a softer January handle will likely persist in fueling concerns regarding competition from prediction markets as DraftKings expands its own prediction offerings.

On the same day, Canaccord lowered its price target on DraftKings Inc. (NASDAQ:DKNG) to $44 from $50 while maintaining a Buy rating following solid Q4 results. Despite the positive quarter, which was supported by favorable sports outcomes and a 4% year-over-year increase in January handle, the stock experienced an after-hours sell-off due to disappointing FY 2026 guidance. Management also addressed competition from prediction markets, noting only a modest impact on engagement centered primarily among lower-value customers, which resulted in an immaterial effect on overall revenue.

DraftKings Inc. (NASDAQ:DKNG) operates as a digital sports entertainment and gaming company in the United States and internationally.

While we acknowledge the potential of DKNG as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you’re looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

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Disclosure: None. This article is originally published at Insider Monkey.