DraftKings stock climbed 5 per cent to $19.46 in morning trading on 5 October 2026 after Bank of America lifted its rating to Buy from Neutral and retained a $27 price target. The upgrade ended a year-long period in which the bank stayed away because of concerns about prediction-market competition. The gain stood out because Flutter Entertainment and MGM Resorts barely moved, suggesting the new view was specific to DraftKings.
Bank of America reverses its prediction-market caution
The investment note said analyst Shaun Kelley upgraded the stock and kept the target at $27. Kelley wrote that Bank of America had remained on the sidelines for the previous year because of "a difficult event path from prediction markets and material risk to estimates". The bank now treats prediction markets as a win-win outcome for DraftKings, sees less chance of cannibalisation, and thinks analyst estimates are reaching a trough. It also described DraftKings as offering a favourable risk-reward setup at its current valuation.
Pressure from Kalshi and Polymarket
Kalshi and Polymarket, both privately held platforms for event contracts including sports outcomes, had hit DraftKings shares hard before the upgrade. The stock was down 44 per cent for the year at that point. DraftKings runs a prediction-market exchange of its own and has said it will continue spending on the product. On the 7 August earnings call, management said more than 600,000 customers had used the predictions offering year to date. The company also said its data showed "no discernible impact from prediction markets on our sportsbook revenue".
Weak second-quarter results behind the call
DraftKings reported $1.44 billion in revenue for the second quarter, below forecasts, and adjusted earnings of $0.09 per share, also below expectations. It kept full-year revenue guidance at $6.5 billion to $6.9 billion. Bank of America saw that steady outlook as supporting its view that analyst estimates are bottoming.
An unchanged target and a competitive field
The $27 price target was not raised. The Globe and Mail reported that Kelley did not argue the business had improved. Instead, the investment case had shifted because investors were overreacting to the prediction-market threat, and the sharp fall in the share price had already done much of the adjustment. That target implied upside of more than 45 per cent, but the upgrade did not change DraftKings' material outlook. The bear case remains that Kalshi and Polymarket are still taking event-contract volume and DraftKings must spend to win it back, which can pressure margins.
Flutter and MGM lag
Flutter Entertainment, owner of FanDuel, moved up 1 per cent, while MGM Resorts slipped 0.6 per cent. The S&P 500 ETF was nearly flat, and the Roundhill Sports Betting & iGaming ETF, which holds both DraftKings and Flutter, gained 3 per cent to $16.73. That pattern framed the Bank of America call as a DraftKings-specific reset rather than a broad sector move.
What to watch next
DraftKings is scheduled to report third-quarter results on 5 November, according to The Globe and Mail. Investors should watch sportsbook handle growth, Predictions revenue and full-year earnings guidance. Chief executive Jason Robins said in the second-quarter release that "we can win the category this NFL season and beyond". The open question is whether analyst estimates have truly bottomed or only stopped falling.
