Jefferies cuts Flutter price target by 45% but keeps 'buy' rating, arguing market prices in zero US growth

Jefferies has maintained its 'buy' standing connected Flutter Entertainment PLC (LSE:FLTR, NYSE:FLUT), the online gambling radical down FanDuel and Paddy Power, portion cutting its terms people astir successful fractional from $380 to $210, arguing the banal has been de-rated to levels that connote nary aboriginal maturation successful its halfway US market.

The broker chopped its net earlier interest, tax, depreciation and amortisation (EBITDA) estimates by betwixt 13% and 19% crossed 2026 to 2028, with US forecasts reduced by 21% to 28%, pursuing full-year results past week that revealed borderline pressures from NFL betting and insufficient promotional efficiency.

Despite the cuts, Jefferies argued the marketplace has overreacted, with Flutter present trading astatine 8 times 2027 EBITDA against a projected five-year EBITDA compound yearly maturation complaint of 16%.

The broker's reverse discounted currency travel analysis, a method that works backwards from a existent valuation to found what maturation complaint the marketplace is pricing in, implies zero aboriginal US growth, a script Jefferies described arsenic contradicted by disposable evidence.

Flutter attributed the caller slowdown successful US handle, the full magnitude wagered, to lawsuit recycling patterns, an unfavourable sports calendar and inefficient promotional spending, each of which the broker characterised arsenic reversible alternatively than structural.

On prediction markets, a caller signifier of event-based wagering that immoderate investors fearfulness could cannibalise accepted sports betting, Flutter said it sees nary grounds of meaningful impact, estimating the effect astatine debased azygous digits percentage-wise.

Jefferies pointed to Flutter's palmy motorboat successful Missouri, a authorities wherever prediction markets launched up of accepted sports betting, arsenic grounds the 2 products service antithetic lawsuit needs, with Flutter signing up 5% of the state's colonisation wrong 30 days.

The broker lowered its medium-term US people to $3.25 cardinal EBITDA by 2030, compared with $4.1 cardinal previously, reflecting much blimpish assumptions connected colonisation penetration and borderline progression.

The shares were up astir 1% at 8,609.64p.