Investing.com - Berenberg upgraded DraftKings Inc. (NASDAQ:DKNG) from Hold to Buy on Thursday, while slightly lowering its price target to $43.00 from $45.00. According to InvestingPro data, the company's current market capitalization stands at $16.87 billion, with the stock trading at $33.98.
The research firm cited DraftKings' solid growth and margin expansion as key factors behind the rating change. The company has demonstrated strong revenue growth of 25.8% over the last twelve months, with a gross profit margin of 43.2%. Berenberg noted that despite downward adjustments due to sports results, the company's underlying business has shown improvements in the first half of the year. For deeper insights into DraftKings' financial health and growth prospects, InvestingPro subscribers have access to over 10 additional exclusive ProTips.
DraftKings has narrowed the gap with competitor FanDuel, with its net revenue margin now 80 basis points closer year-over-year. This progress has helped DraftKings reduce its sports NGR (Net Gaming Revenue) gap to FanDuel, which stood at -18% in Q2 2025, an improvement from -22% in Q1 2025 and -25% in Q4 2024.
The firm pointed out that DraftKings' sports wager volumes are much closer to FanDuel's than the revenue figures suggest, with the gap at just -2% in Q2 2025, compared to -5% in Q1 2025 and -8% in Q4 2024.
Berenberg acknowledged concerns about potential disruption from prediction markets that have contributed to DraftKings' recent stock sell-off, but stated that "the sell-off is overdone" as there has been no impact on financial results so far, and questions remain about the legality of these competing products. InvestingPro analysis indicates the stock is currently in oversold territory based on RSI readings, with the stock price showing significant volatility over recent months.
In other recent news, DraftKings has alerted its customers about a security breach due to credential stuffing attacks. The company discovered unauthorized access to customer accounts on September 2 and has since been investigating the incident. On the financial front, several firms have adjusted their price targets for DraftKings. Mizuho lowered its target to $54 while maintaining an Outperform rating, citing recent stock performance. Jefferies also decreased its target to $51, pointing to third-quarter challenges such as low hold rates and high promotional spending. Craig-Hallum reduced its price target to $48, attributing the change to lower sports betting margins following favorable outcomes for bettors in the early football season. Additionally, Spruce Point Capital Management expressed caution, warning of a potential 35-60% downside risk due to competition from prediction markets. These developments reflect the dynamic environment DraftKings is navigating as it addresses both security and financial challenges.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.