Bullish indicating open at $55-$60, IPO prices at $37
On Friday, Goldman Sachs initiated coverage on Flutter Entertainment (NYSE:FLUT) stock, a prominent player in the online gaming industry, with a Buy rating and a price target of $320.00. This target suggests a 21% upside from the stock's current position. The firm's analysis, based on a proprietary player cohort framework, indicates potential growth for Flutter's US operations that could exceed current consensus estimates.
The firm's coverage on Flutter Entertainment comes with optimism about the company's future performance, particularly in the United States. The Goldman Sachs analyst pointed out that Flutter's UK line has been the best performing stock in their coverage year-to-date. Investors have been curious about the future trajectory of the stock and the reasons for expected further upside.
The analytic framework developed by Goldman Sachs for Flutter's US business focuses on analyzing and forecasting the behavior of individual player cohorts. This approach allows for a deeper understanding of the monetization and growth of these cohorts, the acquisition of new customers in both existing and new states, and the intensity of promotional activities.
Goldman Sachs' confidence in Flutter Entertainment is bolstered by their findings, which suggest that the US market could see growth at a higher rate than currently anticipated by Visible Alpha Consensus. This analysis leads the firm to believe that there may be additional upgrades to Flutter's US business outlook in the future.
The coverage initiation and the positive outlook by Goldman Sachs highlight the potential for Flutter Entertainment's continued success in the online gaming market, particularly in the US sector. The $320 price target set by the firm reflects this potential and the anticipated growth of the company's US customer base.
In other recent news, Flutter Entertainment has been making waves with its financial performance and strategic moves. The company has reported a significant 27% year-over-year increase in Q3 revenue, reaching $3.25 billion and surpassing expectations. This growth was largely fueled by a 51% surge in U.S. operations revenue. The company's adjusted earnings per share were reported at $0.43, outperforming the projected loss of $0.35.
Analysts from Craig-Hallum and Needham have responded positively to these developments, maintaining a Buy rating for Flutter Entertainment and raising the stock's price target to $350 and $300, respectively. The revised full-year guidance for 2024 now anticipates a group revenue of $14.25-$14.55 billion and an adjusted EBITDA between $2.44-$2.62 billion.
In a strategic move to potentially increase the value of remaining shares, Flutter Entertainment has announced a share repurchase program. The first tranche of this program involves the buyback of up to $350 million worth of its ordinary shares, as part of a larger $5 billion program managed by Goldman Sachs & Co LLC.
These recent developments highlight Flutter Entertainment's strong performance and strategic initiatives, demonstrating its resilience and operational excellence within the online gambling sector.
InvestingPro Insights
Flutter Entertainment's recent performance aligns with Goldman Sachs' optimistic outlook. InvestingPro data shows that Flutter's revenue grew by 19.86% over the last twelve months, reaching $13.57 billion. This growth is even more pronounced in the most recent quarter, with a 26.97% increase, supporting the analyst's positive stance on the company's trajectory.
InvestingPro Tips highlight that Flutter's net income is expected to grow this year, and analysts predict the company will be profitable. This aligns with Goldman Sachs' view on potential upgrades to Flutter's US business outlook. Additionally, the stock's strong return over the last month (15.31%) and three months (27.4%) reflects growing investor confidence, possibly influenced by the company's expanding US operations.
It's worth noting that Flutter is trading near its 52-week high, with its current price at 98.44% of that peak. This, combined with the InvestingPro Tip indicating a high return over the last year (61.35%), suggests that the market is already pricing in significant growth expectations.
For investors seeking a more comprehensive analysis, InvestingPro offers 16 additional tips for Flutter Entertainment, providing a deeper understanding of the company's financial health and market position.
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