Wall Street Is Betting These 3 Beaten-Down Stocks Have More Room to Run

Key Points

• Analysts at Bank of America, Citigroup, and Barclays issued contrarian upgrades on DraftKings, Harley-Davidson, and Estee Lauder despite each company's well-known fundamental challenges.
• Bank of America upgraded DraftKings to Buy, arguing prediction market fears are overstated, while Citigroup raised Harley-Davidson to Buy citing its new Back to the Bricks turnaround plan.
• Barclays upgraded Estee Lauder to Overweight on strong fiscal Q4 2026 results, and all three companies report earnings in early November, which will test these upgrades.

The first trading week of October kicked off Monday, Oct. 5, with a wave of analyst ratings and price target updates. September is the final month of the third quarter, and many stock analysts like to reposition ahead of Q3 results, which will begin trickling out over the upcoming weeks. But one thing that stood out amongst the new calls was a trio of upgrades to some of the market’s shakiest stocks. These companies haven’t just been beaten down; the market has left them behind due to seemingly fatal fundamental flaws.

For online sportsbook DraftKings Inc. NASDAQ: DKNG, its prediction markets are taking market share and forcing the company to cannibalize its own client base. Motorcycle manufacturer Harley-Davidson Inc. NYSE: HOG is a declining business that’s losing young buyers and has no plan to win them back. And Estee Lauder Companies Inc. NYSE: EL is handcuffed by stagnating sales in China. But a handful of analysts are bucking these bear cases with upgrades and higher price targets. With all three companies reporting Q3 earnings in the first week of November, we won’t have to wait long to see whether these contrarians called it right.

DraftKings: Bank of America Says Sell-Off Has Gone Too Far

Most stocks in the gambling industry have been hit hard by prediction markets, but DraftKings might be the poster child. The amount of money wagered on Kalshi and Polymarket has grown exponentially since the summer of 2025, and most of it is used for sports betting. (And yes, it's betting, not trading.) Bank of America analyst Shaun Kelley believes the damage from prediction markets has been overstated and upgraded DKNG shares from Neutral to Buy.

This upgrade included no price target change, which is an important caveat. The target is still $27, representing upside of more than 45%, but it doesn’t change the company's material outlook. Kelley doesn’t believe the business improved, just that the value proposition changed with overstated prediction market fears. The stock decline did most of the work. Still, DraftKings Q2 2026 results showed 600,000 customers have used its own Predictions market, and CEO Jason Robins believes this could be a $10 billion opportunity for the company. Investors should watch sportsbook handle growth, Predictions revenue, and full-year earnings guidance when the company reports Q3 2026 results on Nov. 5.

Look, there’s no sugarcoating this ugly chart. DKNG shares are down more than 40% year-to-date (YTD), and more than 60% from the all-time high made in March 2021. The 200-day moving average has been a tough resistance level to break. The recent technical performance is even more alarming as the stock gave up the 50-day moving average before plunging back to prices not seen since April 2023. If there’s one technical signal bullish investors can lean on, it's the Relative Strength Index (RSI), which is getting extremely oversold.

Harley-Davidson: Citigroup Buys the Turnaround

Harley-Davidson received a pair of upgrades from Citigroup and Evercore on Oct. 5, but the Citigroup call is the more interesting of the two.

Citigroup analyst James Hardiman has been one of the company’s biggest believers, raising his price target to $31 in May before upgrading from Neutral to Buy on Oct. 5 with a new target of $33.

Part of the optimism stems from CEO Artie Starrs’s new Back to the Bricks program, which reemphasizes core brands and focuses on dealer profitability.

The company also announced two new lower-priced models aimed at younger buyers and raised full-year 2026 sales guidance during its Q2 2026 conference call. The Q3 call on Nov. 3 could provide hints on demand for these new models and whether dealership economics are improving.

HOG shares appear to be already turning the corner, with a gain of more than 30% YTD driven by institutional and insider buying. In addition to the guidance boost and Citigroup upgrade, the stock is also trading above its 50-day and 200-day moving averages, and the RSI has quickly reversed into bullish territory. This rally is gaining momentum quickly behind fundamental and technical strength.

Estee Lauder: Barclays Sees China Inflection Point

Barclays analyst Lauren Liebermann upgraded Estee Lauder from Equalweight to Overweight and raised its price target from $97 to $108.

The company’s fiscal Q4 2026 results helped drive the upgrade, as revenue, earnings, and margin outlook all came in above market expectations.

China has been one of the sticking points on the Estee Lauder bull case, as choppy monthly sales data has analysts taking different sides of the coin.

Bernstein has a price target of just $82 and has openly questioned the durability of the China rebound. The fiscal Q1 2027 report is due on Nov. 3, and sales growth figures in China and travel retail will break the tension on this call.

EL shares have been volatile in 2026. The stock is down more than 10% on the year, but up about 10% in the last three months and is producing some bullish technical signals. The April drawdown took EL below its 50-day and 200-day moving averages, with the former becoming a support area once the decline halted. A recent Golden Cross confirmed the uptrend, but an overbought signal on the Moving Average Convergence Divergence (MACD) indicator drove shares back toward the 50-day. Downward momentum on the MACD is now waning, and the technical setup is the best it's been in years.