DraftKings Jumps on BofA Buy Rating After 47% Stock Slide

DraftKings just got a vote of confidence from one of Wall Street's biggest banks, and traders are buying it. Shares of the sports betting giant jumped more than 5% Monday morning after Bank of America upgraded the stock to Buy from Neutral.

Analyst Julie Hoover made the call, and her timing is notable. DraftKings stock has been beaten down hard this year, sliding roughly 47% as competition intensified and investors grew nervous about where the betting business goes next.

Hoover sees that selloff differently. She called the pullback an attractive entry point rather than a warning sign, as CNBC and Investor's Business Daily both reported Monday. Bank of America kept its price target at $27, which is well above where the stock traded before Monday's pop.

The 47% drawdown didn't happen in a vacuum. Investors spent much of the year worried that promotional spending across the sports betting industry was eating into margins, while newer entrants chipped away at market share in key states.

The bigger story here isn't just sports betting, though. It's prediction markets — the newer, less-regulated cousin of traditional wagering that lets people bet on everything from Fed rate decisions to election outcomes.

Hoover's note, as Finviz and TipRanks both confirmed, pegs DraftKings' 2027 EBITDA guidance at between $1.0 billion and $1.2 billion. That number assumes only modest growth from the core sportsbook and a limited near-term contribution from prediction markets — meaning there's room to beat if the newer business scales faster than expected.

Bank of America sees DraftKings' prediction markets business generating up to $400 million in fees next year, with another $200 million to $400 million from market making.

That's the thesis in a nutshell. DraftKings isn't just a sportsbook anymore — it's trying to become a full-blown trading venue for event-based bets, and BofA thinks the market hasn't priced that in yet.

For retail investors looking at DKNG, the setup is a classic "show me" story. The stock trades well below its 2026 highs, the NFL and college football seasons are now in full swing, and the prediction markets rollout gives the bull case a second growth lever beyond traditional betting.

There's real risk attached to that second lever, though. Prediction markets remain a regulatory gray zone in the U.S., and how state and federal regulators ultimately treat these products could make or break the long-term opportunity. Competition from FanDuel and newer entrants hasn't eased up either.

Another wrinkle worth watching: some states have already pushed back on event-contract trading platforms, arguing they function like unregulated gambling. A patchwork of state-by-state rulings could slow DraftKings' prediction markets rollout even if the federal posture stays favorable.

Watch the $27 level BofA is targeting — that's roughly 12 times the firm's 2027 EV-to-EBITDA estimate, according to Finviz's breakdown of the note. A sustained move back above recent highs would be the first real sign the market is buying into the turnaround story, not just a one-day upgrade pop.

The broader football calendar matters here too. With the NFL season in full swing and March Madness still months away, DraftKings has a stretch of high-volume betting activity ahead that could validate — or undercut — the near-term growth assumptions baked into Hoover's model.

The next real catalyst is DraftKings' next earnings report, where any update on prediction markets traction or EBITDA guidance will tell investors whether Hoover's call was early or right on time. Watch management's commentary on customer acquisition costs too — that line item has been the market's biggest worry all year.

Bottom line: a 47% drawdown plus a fresh Buy rating from a major bank is the kind of setup contrarian investors watch closely — but this is a bet on regulatory clarity as much as it is on DraftKings' business itself.