On Friday, Citi maintained a Buy rating on Flutter Entertainment Plc (FLTR:LN) (NYSE:FLUT) stock and increased the price target to £260.00, up from the previous £220.00. The adjustment follows the evaluation of Flutter's third-quarter results and the revised full-year 2024 guidance.
Citi's updated forecasts for the company's 2024 and 2025 revenues show a slight increase, primarily due to the better-than-expected performance in the third quarter. While the fourth-quarter estimates for 2024 remain unchanged overall, there is a slight decrease expected in the United States by 1% and a 1% increase outside the United States.
The revised projections include an increase in adjusted EBITDA forecasts for 2024 and 2025 by 2% and 3%, respectively. However, the earnings per share (EPS) estimates have been adjusted to a 6% decrease for the fiscal year 2024, reflecting a $121 million fair value loss related to the Fox Option liability in the third quarter, with no change expected for the fiscal year 2025.
Citi's new estimates for Flutter's 2024 revenue in the United States are at $6.17 billion, which falls within the company's guidance range of $6.05 to $6.25 billion. The adjusted EBITDA for the same period is forecasted at $722 million, also within the guided range of $670 to $750 million.
For Flutter's operations excluding the United States, the 2024 revenue forecast is $8.18 billion, with an adjusted EBITDA of $1.87 billion, aligning with the company's guidance of $1.77 to $1.87 billion.
The Australian market is expected to contribute $296 million to the adjusted EBITDA, closely matching the company's guidance of approximately $290 million.
In line with these forecasts, Citi has also adjusted the sum-of-the-parts (SOTP) valuation enterprise value to EBITDA (EV/EBITDA) multiples for the fiscal year 2025 to reflect anticipated EBITDA growth. The multiples for the UK and Ireland have been increased to 10 times from 9.5 times, the International segment to 11 times from 10.5 times, and the United States to 16 times from 14 times. However, the multiple for Australia has been reduced to 10 times from 10.5 times. These changes underpin the new price target of £260.
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