On Tuesday, Benchmark analysts maintained a Buy rating on shares of DraftKings Inc. (NASDAQ:) shares, keeping the price target steady at $44.00. The decision came in the wake of the company’s lower-than-expected hold from the fourth quarter of 2024, as recent data from December highlighted a trend of customer-friendly sporting outcomes in New York.
Despite the downward revision in the fourth quarter estimates, Benchmark remains optimistic about DraftKings’ growth prospects.
The analysts have adjusted their revenue estimate downward by approximately $136 million and have also decreased their projection for adjusted EBITDA by $96 million. These revisions do not reflect any new guidance from DraftKings since their last update in November.
However, Benchmark’s outlook for the company’s fiscal year 2025 remains positive, citing potential benefits from improved sportsbook hold, promotional optimization, and operational efficiencies.
DraftKings’ revenue guidance for the fiscal year 2025 is set between $6.2 billion and $6.6 billion. This range indicates a year-over-year growth of about 27% to 35% at the midpoint. The company also projects a substantial free cash flow of $850 million for the same period. The target range for adjusted EBITDA is anticipated to be between $900 million and $1 billion. Furthermore, DraftKings expects to achieve a structural sportsbook hold of 11.0% in 2025.
Benchmark’s reaffirmation of the Buy rating and price target underscores their confidence in DraftKings’ ability to hit its fiscal 2025 targets despite the recent adjustments to the fourth quarter of 2024 estimates. The company’s focus on key financial metrics and operational strategies appears to align with the analyst firm’s expectations for its future performance.
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