On Wednesday, Oppenheimer updated its outlook on shares of Flutter Entertainment (NYSE:FLUT), raising the stock's price target to $255 from the previous $240 while retaining an Outperform rating. The adjustment follows Flutter Entertainment's management announcement of a 3% increase in the 2024 EBITDA guidance.
This revision was attributed to a rise in global players, increased parlay penetration in the U.S. market, and robust performance in the U.S. and U.K. iGaming sectors, which saw year-over-year revenue growth of 47% and 26% respectively.
Flutter Entertainment's second-quarter revenue and EBITDA showed considerable growth at 39% and $260 million, respectively, standing in contrast to competitor DraftKings (NASDAQ:DKNG)' 26% revenue increase and $128 million EBITDA. The figures suggest that Flutter Entertainment's FanDuel brand more accurately reflects state revenue reports, indicating more stable promotional levels. However, DraftKings experienced faster growth in new user acquisition.
The Illinois market is projected to have a $50 million gross impact on Flutter's estimated 2024 EBITDA. The company plans to mitigate half of this impact next year by reducing promotions and employing localized marketing strategies, without resorting to a tax surcharge, a move that DraftKings abandoned shortly after releasing its results.
Investors are looking forward to the next catalysts for Flutter Entertainment, which include state data reports that showed a significant 63% year-over-year increase in Gross Gaming Revenue (GGR) in early July and the upcoming Investor Day scheduled for September 25, 2024.
Discussions at the Investor Day are expected to focus on topics such as the company's share of the U.S. iGaming market, potential tax issues, and plans for shareholder returns. Oppenheimer's continued Outperform rating reflects a positive outlook on the company's strategic moves and market position.
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