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UBS has increased the price target for Flutter Entertainment Plc (FLTR: LN) (NYSE: FLUT) to GBP222.00, up from the previous target of GBP217.00. The firm continues to recommend a Buy rating for the stock.
The adjustment reflects UBS's positive outlook on the company's financial performance, as it anticipates an increase in Flutter Entertainment's adjusted EBITDA forecasts for fiscal years 2024 and 2025 by 4% and 3%, respectively.
The analyst from UBS provided insights into the company's future financial health, predicting that by fiscal year 2025, Flutter Entertainment is expected to produce approximately $2 billion in adjusted free cash flow (FCF) and reduce its leverage ratio to 0.97 times.
The projection is based on the company's performance and does not take into account any potential mergers and acquisitions (M&A) spending.
Further, UBS's report from April was referenced, which highlighted the potential for Flutter Entertainment to have significant leverage headroom, estimated to be worth between 11% to 16% of its current market capitalization by fiscal year 2025. This leverage headroom is anticipated before any M&A expenditures are taken into account.
In financial updates, Oppenheimer, BTIG, and Morgan Stanley all revised their price targets for Flutter following robust second-quarter financial results. The company's revenue rose 20%, reaching $3,611 million, and adjusted EBITDA reached £738 million, up 17%. These figures exceeded both the Visible Alpha consensus and Morgan Stanley's projections.
The raised guidance implies a 41% YoY growth at the midpoint for U.S. revenue, reflecting Flutter's continued strong execution in the fast-growing U.S. sports betting and iGaming markets.
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