Bank of America Just Upgraded DraftKings Stock. Here's Why.

Bank of America analyst Julie Hoover says the year-to-date decline in DraftKings (DKNG) shares has baked in near-term headwinds, and the current valuation warrants some exposure to the online betting firm. Hoover upgraded DKNG to “Buy” this morning, with her $27 price target indicating potential upside of about 35% from current levels. 

BofA’s bullish call brings a much-needed reprieve to DraftKings stock that was otherwise down a rather alarming 45% versus the start of this year. 

Why BofA Upgraded DraftKings Stock Today

Much of DKNG shares’ recent declines have been related to concerns that prediction markets like Kalshi will eat into the company’s core business. 

But Hoover views this cannibalization risk as overblown; she reframed the burgeoning prediction markets landscape as a "win-win” in a research note today. 

According to the analyst, Street estimates for DraftKings have now bottomed, and the risk-reward setup is favorable heading into 2027. 

Barchart, however, does not agree with BofA’s constructive stance; its 100% SELL average opinion on the Nasdaq-listed firm suggests technical momentum has not turned in its favor yet.  

What Else Makes DKNG Shares Attractive?

DraftKings shares are worth buying at current levels because the company’s sportsbook handle — despite competition from prediction markets — saw a 15% year-over-year growth during the initial weeks of the NFL season. 

Moreover, Bank of America expects strong cost discipline to support higher incremental margins moving forward, which may contribute to a swift recovery in the Nasdaq-listed firm.  

DKNG is broadly expected to shrink its per-share loss to $0.23 in its current financial quarter, which would represent about a 44% contraction versus last year. 

Hoover’s price target is based on a modest 12x multiple on the sports betting stock’s forward (2027) EV/EBITDA estimate. 

What’s the Consensus Rating on DraftKings?

Crucially, BofA is still among the more conservative Wall Street firms on DKNG stock. 

According to Barchart, the consensus rating on the American digital sports entertainment gambling company sits at “Moderate Buy,” with the mean price target of nearly $34 indicating potential for a 68% upside from current levels. 

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.