Investing.com - Flutter Entertainment (NYSE:FLUT) was in the spotlight Monday, following media reports that the government is considering significant tax hikes on the gambling sector.
At 09:10 ET (13:10 GMT), Flutter Entertainment traded 4.3% lower in London, following reports UK Treasury officials are exploring proposals to raise between £900m and £3bn (£1 = $1.3035) by increasing taxes on online casinos and bookmakers as part of the new Labour government's upcoming budget.
The potential move is seen as part of efforts to address a £22bn shortfall in the UK public finances.
However, the company’s stock was trading considerably lower earlier in the London trading session, and its listing on the New York Stock Exchange was over 5% higher in premarket trading.
This uptick stems from positive comments from a couple of brokerages, which have created doubts about the likelihood of this potential tax charge.
Wells Fargo upgraded its investment stance on Flutter to ‘overweight’ from ‘equal-weight’, raising its US dollar price target to $295 from $224, compared with Friday’s $219.50 closing level.
The stock slumped over 8% on Friday when the news was first circulated, and Wells Fargo said his sell-off reflects a “near-worst case UK tax scenario, with minimal offset,” adding that its US financial targets appear rooted in conservatism.
Bank of America is also positive on the gaming stock, reinstating its coverage with a ‘buy’ rating and a $300 price objective.
“We believe Flutter’s recent US listing along with the company’s orientation away from European gambling and into US consumer Internet should lead to a reappraisal of valuation,” analysts at Bank of America Securities said, in a note dated Oct. 14.
“Despite similar-to-better business and financial characteristics, Flutter trades at a 35% discount to its ‘new peers’, highlighting strong re-rating potential.”