Analysts keep trimming DraftKings price targets

• Morgan Stanley has cut its DraftKings target to $36 from $39, maintaining an Overweight rating.
• The revision follows July cuts from Truist and MoffettNathanson, with mixed online demand cited.
• DraftKings shares trade near $22.82, down roughly 34% in 2026, ahead of August 6 earnings.

Morgan Stanley has lowered its price target on DraftKings to $36 from $39 in a second-quarter preview of the North American gaming sector, reported on July 23 by MT Newswires.

The bank kept its Overweight rating, joining a string of analysts who have trimmed expectations for the operator this month without abandoning their bullish stance.

Mixed online signals

The revision came as part of Morgan Stanley’s broader Q2 earnings preview for North American gaming. According to the note, the quarter has shown stronger demand trends for US brick-and-mortar casinos, with online performance described as more mixed.

Even after the trim, the new $36 target sits well above where the stock trades. DraftKings shares changed hands around $22.82 on July 23, down roughly 34% since the start of the year, per MarketScreener data.

Analysts polled by FactSet hold an average rating of overweight on DraftKings, with a mean price target of $33.98. Morgan Stanley’s revised target therefore remains above consensus.

The move extends a run of reductions across the sell side. Truist lowered its target to $29 from $30 on July 20, keeping a Buy rating. MoffettNathanson trimmed to $25 from $27 on July 15. Deutsche Bank went the other way, raising its target to $28 from $26 on July 9 with a Hold rating.

Morgan Stanley’s own coverage has followed the same downward path through 2026: from $53 to $40 in February after full-year guidance disappointed, then to $39 in May as prediction market marketing spend weighed on near-term profit estimates.

The prediction markets clash

Much of the uncertainty pressing on DraftKings’ valuation traces back to its collision with prediction markets, a fight the operator has chosen to wage from inside rather than watch from the sidelines.

It launched DKeX, its proprietary CFTC-regulated exchange, in late June, folding the product into its unified Sports & Casino app after annualized volumes on DraftKings Predictions climbed past $3.4bn.

The threat driving that pivot is Kalshi. During the World Cup, Kalshi outpaced DraftKings on pricing, with prediction market trading volume equal to an estimated 27% of US sports betting handle over the tournament.

The rivalry has turned openly combative, with former DraftKings president Matt Kalish publicly attacking Kalshi as the two platforms battle for the same customers.

The prize explains the aggression. Citizens has argued the segment could add up to $14bn to DraftKings’ enterprise value by 2030. Morgan Stanley has itself modeled a path to material prediction markets revenue, but the near-term cost is heavy marketing spend that compresses EBITDA and clouds the earnings picture analysts are trying to value.

Pressure before earnings

DraftKings reports second-quarter results on August 6, the first full read on whether the prediction markets push is converting spend into durable volume.

Legal overhang adds another variable: the operator sued the city of Philadelphia in mid-July after receiving a subpoena, seeking to block a new consumer protection law and end an enforcement probe, months after being sued over microbetting alongside FanDuel and the NFL.

Geographic expansion continues in parallel, with the operator having launched in Alberta in mid-July, its second regulated Canadian province. The August results will show whether those growth bets are gaining enough traction to stop analysts from continuing to cut, or whether the sell side has more trimming to do.