1Q Review: Core Strength Funds Aggressive ‘Predictions’ Push - No Hit to Guide

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1Q Review: Core Strength Funds Aggressive ‘Predictions’ Push - No Hit to Guide

tment can be absorbed without pressuring near-term

financial outcomes.

Estimate revisions reflect timing, not structural change

We are lowering our 2Q–3Q Adj. EBITDA estimates to reflect a more pronounced investment

cadence, while increasing our 4Q estimates on stronger underlying monetization and margin

trends. Importantly, our FY26 estimates remain broadly aligned with management guidance.

Figure 2 Near Term Pressure, Full Year Durability

TD Cowen Estimate vs. Street, 2Q26 TD Cowen Estimate vs. Street, FY26 FY26 Guidance

New Old Street New Old Street Low Mid High

Revenue $1,566 $1,566 $1,561 $6,828 $6,779 $6,774 $6,500 $6,700 $6,900

% growth (y/y) 3.5% 3.5% 3.2% 12.8% 12.0% 11.9% 7.4% 10.7% 14.0%

Adj. EBITDA $221 $279 $226 $749 $794 $761 $700 $800 $900

% margin 14.1% 17.8% 14.5% 11.0% 11.7% 11.2% 10.8% 11.9% 13.0%

Source: Company filings; Visible Alpha; TD Cowen.

As shown in Figure 2, near-term estimates reflect increased spend, but full-year profitability

remains intact, with the model supported by improving OSB monetization and a stronger NFL-

season outlook.

$30 PT reflects Base Business Strength; Predictions Remains Upside Optionality

Our $30 price target is based on ~20x FY26 EBITDA, which we believe appropriately reflects

DraftKings’ improving profitability profile and embedded operating leverage. Despite strong

execution, the stock trades at a discount to this level, in our view underappreciating the

durability of core monetization.

Underlying fundamentals support multiple durability

Importantly, our estimates assume no material contribution from Predictions, as management

is conservatively underwriting the investment with spend reflected in guidance but limited NT

revenue assumed.