Stifel Affirms ‘Buy’ Ratings for DraftKings and Flutter Despite Price Target Adjustments
Research firm Stifel maintained its optimistic outlook on the two dominant players in the U.S. online gaming market: DraftKings Inc. (DKNG) and Flutter Entertainment Plc (FLUT), the parent company of FanDuel. Stifel kept a Buyrecommendation for both companies, citing compelling growth trends, although it slightly reduced the price targets for both stocks.
DraftKings Analysis: Scale and Cash Flow Trajectory
Stifel upheld its Buy recommendation for DraftKings. The firm pointed to the company’s “convincing FCF [Free Cash Flow] trajectory” and an upward trend in consensus estimates as key drivers.
Stifel lowered its price target for DKNG slightly to $50.00 from $51.00, though some reports indicate the $51.00 target was reaffirmed post-acquisition news. Analysts expect DraftKings to show continued sales growth this year, following a strong 25.8% revenue growth over the prior twelve months.
Stifel identified several factors giving DraftKings a structural edge:
- Product Execution: The company is showing strong product execution and healthy growth trends in handle/GGR (Gross Gaming Revenue) across existing states.
- Market Rationality: DraftKings benefits from the market’s “sustained rationality in marketing/promotions.”
- Strategic Advantage: The firm concluded that DraftKings’ scale, its first-mover advantage, and its “swiftly achieved product co-leadership” are strong competitive advantages.
Stifel views DraftKings’ valuation as “reasonable compared to historical European counterparts,” provided the company accurately meets its forecasts for “stabilized” adjusted EBITDA.
The research firm acknowledged ongoing concerns regarding disruption from new entrants like ESPN Bet, Fanatics, bet365, and BetMGM.
Stifel positively noted DraftKings’ strategic move into prediction markets. The company announced the acquisition of Railbird Technologies Inc., which includes a federally licensed subsidiary. This move will allow DraftKings to offer regulated event contracts through a new mobile application called DraftKings Predictions.
Flutter (FanDuel Owner) Analysis: Scale and FCF Potential
Stifel also maintained a Buy rating for Flutter Entertainment, which operates its primary U.S. brand, FanDuel.
Stifel reduced Flutter’s price target to $339.00 from $356.00. However, analysts see “significant potential upside”overall, with price targets ranging from $262 to $389 across the analyst community.
Stifel projects strong financial growth for Flutter, forecasting a Free Cash Flow growth algorithm of approximately 56% CAGR between 2024 and 2027. This growth is supported by the secular expansion of the Total Addressable Market and Flutter’s advantage in product and scale. The consensus estimates for the 2025 fiscal year appear “reasonable,” with potential upside in 2026 and 2027 driven by market dynamics and regulatory consolidation.
Stifel believes that potential growth catalysts for Flutter, such as consensus estimate increases, potential inclusion in the S&P 500 Index, and state expansion, outweigh negative factors. Stifel emphasized Flutter’s crucial scale advantage in both online sports betting and internet casino operations.
The firm did acknowledge execution risks related to the company’s fast pace of mergers and acquisitions. External factors have also led other research firms to lower their price targets:
- India Operations: Flutter faced a $50 million EBITDA loss due to its exit from operations in India.
- Marketing Investment: Other firms cited poor NFL betting hold rates and high marketing investments as reasons for lowering their estimates.
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