TLDR JPMorgan downgraded DraftKings to Neutral from Overweight and cut its price target to $21 from $30. The bank removed DraftKings from its Analyst Focus List after the stock fell 21% on Friday. JPMorgan says DraftKings’ targets imply 75% core EBITDA flow-through in 2027, compared with a past rate of 30% to 40%. The bank sees risk to the planned $300 million prediction market spend in 2027, after $675 million in 2026. Analyst Daniel Politzer warned that sports prediction markets could still go away in 2028.
JPMorgan downgraded DraftKings to Neutral from Overweight, citing doubts about how the sports betting company will reach its profit targets for 2027 and 2028. The bank also cut its price target to $21 from $30.
Analyst Daniel Politzer removed the stock from JPMorgan’s Analyst Focus List as part of the move. The downgrade was published early Monday, Nov. 9, ahead of the market open.
The call came after DraftKings shares fell 21% on Friday while the S&P 500 finished flat. The stock closed at $18.51, and the new $21 target sits about 13% above that level.
Politzer wrote that the downgrade “was not an easy decision” given the stock’s recent drop. He said he has little conviction in the company’s earnings estimates for fiscal 2027 and 2028, which makes it hard to recommend the stock.
The Gap in DraftKings’ Profit Plan
At the center of the downgrade is a math problem. JPMorgan estimates that DraftKings’ targets imply 75% of new revenue in fiscal 2027 would flow through to core earnings before interest, taxes, depreciation and amortization, or EBITDA.
That figure compares with a historical rate of 30% to 40%. Politzer said this means DraftKings may need to lean more on cuts to marketing and operating costs to hit its goals.
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