DraftKings Positioned for Growth, According to Morgan Stanley

DraftKings Projected to Exceed EBITDA Expectations

Morgan Stanley has released an optimistic outlook on DraftKings, highlighting the sports betting company’s potential to significantly surpass its projected earnings before interest, taxes, depreciation, and amortization (EBITDA). While DraftKings initially forecasted an EBITDA of $200 million for the second quarter of 2025, Morgan Stanley estimates the figure could approach $260 million, well above the company’s own guidance.

Strong Momentum in U.S. Gaming Market

The investment bank points to DraftKings’ robust and sustained growth across the U.S. market as a key driver behind these projections. This positive momentum has also been reflected in the company’s stock performance, which has increased by 17%, outpacing many other companies in the S&P 500 index.

Challenges and Regulatory Considerations

Despite these promising developments, DraftKings faces certain hurdles, including the implementation of a new betting tax in Illinois and initial expenses related to its expansion in Missouri. However, the company remains well-positioned to meet and potentially exceed its forecasts, even with adjustments required by evolving regulatory environments.

Positive Analyst Sentiment and Strategic Focus on iGaming

The company’s encouraging performance in the iGaming segment is another factor contributing to analyst confidence. Morgan Stanley emphasizes that DraftKings’ strategic emphasis on expanding its digital offerings has generated substantial results. This approach is particularly beneficial as physical gaming venues continue to face challenges, partly due to decreased travel.

Broad Support from Investment Banks

Morgan Stanley’s upbeat stance is echoed by other financial institutions such as Citi, which maintains a Strong Buy rating for DraftKings. The company’s stock has shown consistent growth in recent weeks, underscoring the positive market sentiment surrounding its future prospects.