DraftKings cut at JPMorgan as shares slide in response to Penn-ESPN deal

DraftKings Inc (NASDAQ:) was raised to neutral from Underweight at JPMorgan (NYSE:) on Wednesday, maintaining a $26 price target on the stock.

The firm told investors in a note that they are moving their rating on the stock to Neutral following the PENN Entertainment Inc (NASDAQ:) and ESPN deal.

DKNG shares are down more than 9% at the time of writing.

“Given where current after-market levels are ($29+, down ~10% from its closing price), we are using this price weakness to up our rating to Neutral from Underweight,” the firm explained.

“Shares of DKNG are down in response to PENN-ESPN’s agreement tonight, which is causing a negative reaction on (presumably) increased competition and promotional pressure (which we see as a reasonable interpretation),” it added.

The firm concluded that the deal has “the potential to disrupt what has been an increasingly more rational OSB/iCasino environment.”