Oppenheimer has adjusted its price target for Flutter Entertainment (NYSE: FLUT), a prominent player in the online betting and gaming industry.
The firm increased the target to $300 from the previous $255, while reiterating an Outperform rating on the stock. This adjustment comes in the wake of Flutter Entertainment's Investor Day, which showcased a promising financial trajectory and strategic initiatives.
The company's Investor Day revealed an ambitious EBITDA target of $2.4 billion for its US segment by 2027, a significant leap from the estimated $740 million in 2024.
Flutter's management also outlined a product roadmap designed to secure a 16% US structural hold, up from approximately 13% in the second quarter. Moreover, the announcement of a $5 billion stock buyback program further strengthens the company's investment appeal.
According to Oppenheimer, the guidance for 2025 suggests that Flutter's US segment could achieve incremental margins of around 40-45%. This projection is based on the assumption of a stable and rational US market, as evidenced by the positive reaction of DraftKings (NASDAQ:DKNG) shares, which increased by 5% following the event.
The firm noted that while Flutter is prepared to escalate its spending if the lifetime value to customer acquisition costs (LTV/CAC) ratios improve, the current strategy reflects a prudent approach to the market.
The analyst also highlighted the company's international business, pointing out that excluding the US, Flutter's EBITDA is expected to grow organically by about 10-13%. This growth is seen as sustainable even in the face of potential tax increases, with medium-term US gross margin targets providing a cushion.
The firm is particularly enthusiastic about the introduction of innovative betting options such as "Your Way" parlays, which offer more combination and player-prop choices, and the potential launch of ACCA Freeze in the US market.
In other recent news, Flutter Entertainment has been the focus of various analysts following its Q2 earnings report, which highlighted a 20% revenue increase to $3,611 million and a 17% rise in adjusted EBITDA to £738 million.
The company's acquisition of Italian gaming operator Snaitech S.p.A. for approximately €2.3 billion ($2.53 billion), expected to finalize in Q2 2025, is also noteworthy. Benchmark reiterated a Buy rating for Flutter, praising its strategic vision and robust global strategy. Wells Fargo also maintained an Equal Weight rating, emphasizing the company's strategic growth potential and market dominance.
Meanwhile, MoffettNathanson raised Flutter's price target to $275, maintaining a Buy rating. BTIG and Barclays also maintain positive ratings, with price targets set at $249.00 and $263.00 respectively.
InvestingPro Insights
As Flutter Entertainment (NYSE:FLUT) garners attention with its strategic growth initiatives, real-time data from InvestingPro offers additional insights into the company's financial health and market performance. Despite a challenging P/E ratio, which stands at -38.58, the company's market capitalization remains robust at $43.48 billion. This valuation reflects investor confidence in the company's future prospects, particularly as its revenue shows a healthy growth trajectory with a 16.28% increase over the last twelve months as of Q2 2024.
InvestingPro Tips indicate that while analysts predict the company will be profitable this year, there are concerns as three analysts have revised their earnings downwards for the upcoming period. Additionally, the stock's recent performance has been strong, with a 14.95% return over the last month and a 32.51% return over the last three months. It is worth noting that the company is trading at a high Price/Book multiple of 4.31, which could suggest a premium valuation compared to book value.
For investors seeking a deeper dive into Flutter's financials and market performance, InvestingPro provides a wealth of additional tips and metrics. There are 11 more InvestingPro Tips available, which can offer further guidance on whether Flutter Entertainment aligns with their investment strategy.
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