Jeffries Thinks DraftKings (DKNG) Share Decline Is Nearing End, Keeps Buy Rating

DraftKings Inc. (NASDAQ:DKNG) is one of the 14 Best Consumer Discretionary Stocks to Buy Right Now.

Jefferies analyst David Katz, on February 15, reduced his target price on DraftKings by 8.0% to $46 (from $50) but kept the firm’s buy recommendation on the stock. The company’s conservative guidance in 2026, which David says includes several new product development and new location launch costs that will not immediately contribute to revenue, is one of the reasons for this change in target price.

He, however, thinks that the decline in the company’s share price (which has fallen ~35% to 40% year-to-date) is nearing its end. On an industry level, he thinks that US sports betting demand will continue to grow at its current pace, with DraftKings remaining as one of the industry leaders.

This update from Jefferies comes on the heels of the release of DraftKings’ Q4 2025 results on February 12. The company delivered $136.4 million in attributable net income, coming from a net loss of $135.9 million in Q4 2024. This swing was driven by higher sportsbook volume (+12.3% YoY) and improving hold rates (+250 basis points YoY), which led to a 63.8% YoY increase in sportsbook revenue.

Despite the strong results, investors were disappointed by management’s 2026 guidance. Management expects $6.5 billion to $6.9 billion in new revenue (vs. the consensus of $7.29 billion), which would yield an EBITDA increase of $700 million to $900 million. Management said that their forecast took into account expected investment in developing new products (DraftKings Predictions) and entry into new jurisdictions. Both of these activities will require high costs and will likely not contribute to revenue immediately in 2026.

DraftKings Inc. (NASDAQ:DKNG) is a gaming company that provides online sports betting, online casino, and fantasy sports products. The company is based in Boston, Massachusetts, and was founded in December 2011 by Jason Robins, Matthew Kalish, and Paul Liberman.

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.

READ NEXT: 30 Stocks That Should Double in 3 Years and 11 Hidden AI Stocks to Buy Right Now.

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