Analysts Optimistic Regarding Flutter’s Prospects Despite Market Headwinds

Flutter Entertainment, the parent company of FanDuel, continues to enjoy optimistic projections among analysts, with recent evaluations highlighting its strong market position and robust growth potential. Macquarie and Deutsche Bank analysts continue to be confident in Flutter’s long-term prospects despite a challenging market environment, citing its consistent performance in key markets.

Experts Largely Agree in Their Projections

Macquarie analyst Chad Beynon settled on an Outperform rating for Flutter and a $340 price target, praising the company as a “rare large-cap stock” that meets the Rule of 40, a benchmark requiring revenue growth and profit margins to reach or exceed 40%. Beynon anticipates compound annual growth rates (CAGR) of 12% in revenue and 21% in EBITDA through 2030.

We believe FLUT is undervalued relative to its intrinsic worth, future growth prospects, and its peers.

Chad Beynon, Macquarie analyst

Based on Beynon’s analysis, Flutter’s stock could rise to as much as $600 by 2028. Deutsche Bank’s Simon Davies echoed the optimism. He raised his target for Flutter to $301.70 from $240.66, maintaining a “buy” rating and citing the company’s positioning for continued growth, especially in the US. Davies praised the operator’s pricing and risk management capabilities.

We think Flutter seems well positioned, starting to exploit its strengths while consistently delivering higher gross win margins than its peers.

Simon Davies, Deutsche Bank analyst

FanDuel’s US market leadership position has been pivotal to Flutter’s regional success. The brand commands a 35% share in sports betting and online casinos, with a 12% gross win margin significantly exceeding that of its competitors. The introduction of parlay bets has been instrumental in these results as they deliver substantially higher profit margins than straight bets.

A Robust Foundation Underpins Ambitious Growth Plans

Analysts also pointed to Flutter’s international footprint as a significant growth driver. The company retains its momentum in the UK and Australia while emerging markets like Brazil and Italy promise further opportunities. Further expansion into high-growth regions such as Latin America and transformative acquisitions in the USA may further improve Flutter’s growth outlook.

Flutter’s short-term financials remain solid, with Q3 2024 revenue jumping 27% year-on-year to $3.25 billion. Adjusted EBITDA skyrocketed 74% to $450 million as net losses shrank. Since its US listing, Flutter has grown its US shareholder base from 45% to 60%, with American investors providing upwards of 80% of the company’s trading liquidity. Flutter also recently announced a $350 million share buyback program to reduce share capital and boost shareholder value.

Most analysts agree Flutter enjoys robust investor confidence underpinned by solid financials and an ambitious growth plan. This stable foundation should provide the company with significant leeway to adapt to changing market conditions, remain ahead of the competition, and bolster its global footprint, ensuring long-term success.