Barclays has maintained its positive outlook on Flutter Entertainment (NYSE: FLUT), reiterating an Overweight rating and a price target of $275.00.
The endorsement comes amidst the company's shifting revenue landscape, with the United Kingdom business becoming a smaller portion of Flutter's global operations.
According to Barclays, Flutter Entertainment's UK and Ireland EBITDA mix is projected to decrease from 42% in the estimated 2024 to 23% by 2027, even before potential impacts from tax changes.
In contrast, the company's United States market share is expected to increase significantly, rising from 30% to approximately 47% within the same timeframe.
The firm also touched on Flutter's group target for 2027, aiming for $5.2 billion in EBITDA. Barclays provided a scenario where a hypothetical doubling of the tax rate, with an estimated 50% mitigation strategy, would result in an impact of approximately 8% on EBITDA. This scenario is considered a worst-case situation, not accounting for any potential market share gains.
In other recent news, Flutter Entertainment reported a 20% increase in Q2 revenue to $3,611 million and a 17% rise in adjusted EBITDA to £738 million. The company also confirmed its acquisition of Italian gaming operator Snaitech S.p.A. for approximately €2.3 billion ($2.53 billion), expected to finalize in Q2 2025.
Analyst firms have reacted positively to these developments. Susquehanna raised its price target for Flutter Entertainment, citing the company's growth potential and pending acquisitions in Italy and Brazil.
Craig-Hallum and Oppenheimer also increased their price targets to $275 and $300 respectively, maintaining positive ratings on the stock. Flutter Entertainment also disclosed a regulatory filing for a block listing application for its ordinary shares and an update on its total voting rights.
InvestingPro Insights
Flutter Entertainment's strategic shift towards the U.S. market, as highlighted by Barclays, is reflected in recent financial data from InvestingPro. The company's revenue growth of 16.28% over the last twelve months, with a notable 20.33% quarterly growth in Q2 2024, aligns with the projected increase in U.S. market share. This growth trajectory is further supported by an impressive EBITDA growth of 44.15% in the same period.
InvestingPro Tips suggest that Flutter's net income is expected to grow this year, and analysts predict the company will be profitable. This outlook resonates with Barclays' positive stance and the company's ambitious 2027 EBITDA target. The strong return over the last five years, as noted by InvestingPro, also supports the strategic decisions Flutter is making in diversifying its revenue streams.
It's worth noting that Flutter is currently trading at a high EBIT and EBITDA valuation multiple, which could be reflective of the market's optimism about its future prospects, particularly in the U.S. market. For investors seeking a more comprehensive analysis, InvestingPro offers 5 additional tips that could provide further insights into Flutter's financial health and market position.
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