Flutter Has Recession Insulation, Multiple Tailwinds, Says Analyst

Flutter Has Recession Insulation, Multiple Tailwinds, Says Analyst

Flutter Entertainment (NYSE: FLUT) shares have risen 9.44% year-to-date — a remarkable achievement in light of the challenges posed by a new sports betting tax hike in Illinois.

One analyst anticipates significantly greater potential growth for the parent company of FanDuel. In reinstating coverage of the gaming stock, Jefferies analyst James Wheatcroft assigns Flutter a “buy” recommendation with a Wall Street-high price target of $380, suggesting an upside of about 35% from the current close. A key factor behind the analyst’s optimism regarding the stock is its resilience during recessions.   "Our recent in-depth Recession Scenario note flagged the lack of historical correlation between online gambling and the macro backdrop. FLUT’s high online exposure (91% revenues), high geographic diversity (59% revenues outside main market), and solid balance sheet (2.2x leverage, with ongoing buyback) add insulation,” wrote Wheatcroft in a note released after the close of US markets today.

The analyst states that the recent stagnation in Flutter's US handle growth is primarily due to the operator cutting back on promotional expenditures and an evolving product range rather than a consequence of broader economic weaknesses.

 

Flutter's global presence might enhance stock performance.

For American gamblers and numerous investors in this nation, Flutter is recognized as the parent company of FanDuel. That is precise, and the significance of the US to the operator's investment strategy is underscored by a newly established reporting framework where the company distinguishes between international and domestic outcomes separately.

Nevertheless, Flutter’s global reach cannot be overlooked and it signifies a possible edge over certain rivals, like DraftKings (NASDAQ: DKNG), which function exclusively in North America. Wheatcroft observes that market players might not entirely recognize the non-US opportunities presented by Flutter

“Despite 1Q25 headlines suggesting International market share losses, we see encouraging underlying dynamics in several markets (UK&I, Italy, Australia, Brazil), with further runway for share gains supported by regulatory change and mergers and acquisitions,” observes the analysts.

Regarding international acquisitions, Flutter has been successful in this area, securing a majority interest in Brazil’s NSX Group and acquiring Italy’s Snai — transactions that enhance their presence in two of the leading gaming markets globally, apart from the US.

 

Flutter Stock Assessment Isn’t Challenging

Among the various advantages held by Flutter are the frequently mentioned potential for the stock to be added to the S&P 500 and the firm's share buyback initiative, which could reach as high as $1 billion this year. According to Wheatcroft, even considering that repurchase activity, Flutter might distribute up to 60% of its existing market capitalization to investors by 2030.

The analyst highlights that Flutter’s free cash flow yield might hit 5% by next year, potentially doubling to 10% by 2030

“Valuing the US at a 20% premium to DraftKings and International in line with S&P 500 consumer discretionary peers implies a $350 sum-of-the-parts price,” concludes Wheatcroft. “Or another way, a 20% premium to DraftKings implies International trades on 10x EV/EBITDA vs 13.5x historically. Our new Street-high $380 price target is DCF-based to reflect the long-term US opportunity.”