Bank of America upgrades DraftKings to Buy and maintains its $27 price target

On October 5, 2026, Bank of America upgraded its rating on DraftKings from Neutral to Buy and maintained its $27 price target for the stock. Analyst Julie Hoover justified the change by citing an improved risk-reward profile following the share price decline, as well as the opportunity the firm sees in prediction markets.

Reported stock market reactions vary depending on the coverage and the point in time observed: some articles described gains of around 5% or 7.5%, while another reported a rise of more than 8% in the previous session. These movements reflect share prices at specific points in time and do not determine the stock’s future performance.

Prediction markets: an opportunity with caveats

According to Bank of America estimates cited in the coverage, DraftKings could generate around $400 million in fees tied to these markets by 2027, in addition to between $200 million and $400 million from market-making activities. These are analyst forecasts, not guaranteed revenue. Their realization would depend, among other things, on the business’s viability and regulatory decisions in the United States.

Hoover argues that concerns about possible cannibalization of traditional sports betting have not been borne out so far: since the start of the American football season, conventional sportsbooks have reportedly grown more than prediction markets. That observation describes the period cited in the coverage and does not rule out the possibility that competition between the two products could change later.

The firm also outlines different regulatory scenarios. If prediction markets are allowed to operate and expand, they could generate revenue; if they are restricted or shut down, Bank of America believes that some of the uncertainty weighing on DraftKings’ valuation would disappear. Both are arguments made by the analyst, not confirmed outcomes.

Forecasts diverge depending on the time horizon

Bank of America cut its 2026 EBITDA forecast from $625 million to $500 million, partly because it expects investment in prediction markets to be greater than initially anticipated. By contrast, it raised its 2027 estimate from $1.05 billion to $1.15 billion, based on expectations of greater strength in the core business and potential contributions from market-making.

According to the coverage, the $27 valuation is based on a multiple of 12 times Bank of America’s estimated 2027 EV/EBITDA. EV/EBITDA compares enterprise value—which adds the market value of equity and debt, and subtracts cash—with EBITDA; it is not simply a multiple applied to EBITDA. The price target and forecasts are the firm’s estimates and may change if its assumptions change.

Investment and cost discipline remain in focus

Bank of America believes market estimates could be close to bottoming out, but warns that investment in the new markets adds uncertainty to near-term results. Over the longer term, Hoover said she would like to see greater cost discipline in the core operations to support margins and cash flow from 2028 onward.

For companies following DraftKings, the rating change puts the focus both on the commercial potential of prediction markets and on the costs required to develop them. Bank of America’s bullish thesis depends on the company being able to sustain sports betting growth and turn the new activity into revenue within a still-uncertain regulatory framework. The rating and price target express that institution’s opinion; they do not guarantee results or constitute a reliable forecast of the share price.