On Thursday, Susquehanna adjusted its price target on shares of Flutter Entertainment (NYSE: FLUT), reducing it to $235 from the previous $249, while maintaining a Positive rating on the stock. The firm's decision comes as Flutter Entertainment prepares for its primary listing on the New York Stock Exchange on May 31, 2024.
The revision in the stock price target is attributed to anticipated lower valuation multiples in the company's US segment. This adjustment reflects a projected delay in the profitability curve due to increased taxes, specifically the Illinois Online Sports Betting (IL OSB) taxes.
Moreover, the second half of 2024 is expected to bring heightened competition, with FanDuel's investment in iCasino and predictions that both FanDuel and DraftKings (NASDAQ: NASDAQ:DKNG) will intensify their market efforts in Illinois and neighboring states.
Despite the lowered price target, Susquehanna's analyst remains optimistic about Flutter Entertainment's performance in the United Kingdom and Ireland, which are seen as the company's "lead horse."
The firm anticipates near-term strength in these regions before the implementation of new regulatory changes aimed at curbing problem gambling, set to take effect on September 1, 2024. The Australian market is noted to be weak, but this is expected to be balanced by the company's international operations.
In terms of the impact on US indices, the changes are expected to be minimal in the near term. There might be some adjustments in the CRSP indices, potentially involving around 13 million shares, while the S&P 500 and Russell indices will likely undergo reviews in September.
Susquehanna also indicated a slight increase in its full-year projections for Flutter Entertainment for both 2024 and 2025, despite the lower US valuation multiple contributing to the reduced price target. The firm's reiteration of a Positive rating suggests confidence in the company's overall performance and growth prospects.
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