On Wednesday, Guggenheim adjusted its price target for DraftKings Inc. (NASDAQ: NASDAQ:DKNG), bringing it down to $52.00 from the previous $53.00, while still holding a Buy rating on the company's stock. The revision comes after the firm updated its model for the second quarter and the full year of 2024, taking into account new challenges that have emerged since their last report on May 3, 2024, following first-quarter earnings.
The firm's second-quarter revenue estimate for DraftKings remains at $1.12 billion, reflecting a 28% growth which aligns with the company's guidance. However, the adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) expectation has been reduced to $143 million from the previously anticipated $164 million.
This adjusted forecast is now closer to the management's guidance of nearly $150 million but reflects a downturn due to certain unfavorable outcomes and the effect of a higher number of new customer additions on the gross margin.
For the full year of 2024, the firm now expects DraftKings' adjusted EBITDA to be approximately $482 million, a decrease from the earlier forecast of $531 million. This projection sits within the company's own guidance range of $460 million to $540 million. The revised full-year estimate includes the updated second-quarter figures, the impact of increased tax rates in Illinois, and a minor setback due to the earlier-than-anticipated closure of Jackpocket, a third-party lottery game app.
Despite the adjustment in the short-term projections, Guggenheim remains optimistic about DraftKings' long-term performance. The firm's forecast for the company's EBITDA in 2025 is now set at $1.007 billion, slightly lower than the previous estimate of $1.039 billion. The reduction in the price target to $52 reflects these updated expectations while still maintaining a positive outlook on the stock's future.
In other recent news, DraftKings Inc. has been the subject of various developments. Deutsche Bank reiterated a hold rating on DraftKings shares with a target of $35, citing regulatory risks and a potential shortfall in 2Q24 earnings. The firm also adjusted its 2Q24 adjusted EBITDA forecast for DraftKings to $134 million, down from the previous $175 million estimate.
On the personnel front, DraftKings reappointed Erik Bradbury as its Chief Accounting Officer, marking his return with a significant restricted stock unit award. In other analyst news, Morgan Stanley maintained its Overweight rating and a $51.00 price target on DraftKings shares, reestablishing its position as their Top Pick in the North American Gaming & Lodging sector.
Susquehanna International Group maintained a positive rating but lowered its shares target to $49 from $56, reflecting stronger than anticipated industry growth and the recent acquisition of JackPocket. Meanwhile, Stifel adjusted its price target for DraftKings shares to $50 due to recent legislative developments in Illinois. Lastly, BMO Capital maintained an Outperform rating and a stock price target of $54.00 for DraftKings, showing confidence in the company's long-term prospects despite potential challenges from new tax legislation in Illinois.
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