Needham analyst Bernie McTernan maintained a Buy rating on DraftKings Inc. (NASDAQ:DKNG) and reiterated the $65 price forecast following the first quarter results reported on Thursday.
The company reported first-quarter revenue of $1.41 billion, which missed a Street consensus estimate of $1.44 billion, and earnings per share of 12 cents, which missed a Street consensus estimate of 22 cents per share.
The company lowered its full-year revenue guidance from $6.3 billion to $6.6 billion to a new range of $6.2 billion to $6.4 billion.
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The company also cut its full-year adjusted EBITDA guidance from $900 million to $1.0 billion to a new range of $800 million to $900 million.
The analyst writes that unfavorable sports outcomes negatively affected the company’s first-quarter results, leading to a downward revision of their full-year 2025 revenue and adjusted EBITDA guidance.
Nevertheless, the analyst adds that the company highlighted strong underlying trends driven by a higher structural hold and efficient use of promotional spending.
Considering investors’ focus on betting volume (handle) trends, the analyst believes DKNG’s reported 16% growth in online sports betting (OSB) handle (compared to 8% for Flutter Entertainment’s (NYSE: FLUT) U.S. operations, although the difference is narrower for pre-2024 states) should significantly improve sentiment on DKNG shares, and potentially the sector.
McTernan says that ongoing product enhancements, particularly in in-play betting, are likely driving DKNG’s outperformance in handle growth.
Price Action: DKNG shares are up 3.46% at $36.57 at the last check on Friday.
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