Last Update03 Oct 25Fair value Decreased 1.04%
Flutter Entertainment’s consensus analyst price target has edged down from $345 to $340. Analysts cite softer-than-expected sports betting margins in September, despite earlier quarter strength, as the primary rationale for the revision.
Analyst Commentary
Recent analyst notes on Flutter Entertainment present a mix of optimism and caution, reflecting both the company's strong execution and the challenges ahead. The majority of research emphasizes solid Q2 results and growth opportunities. Analysts also flag headwinds related to market developments and margin pressures.
Bullish Takeaways- Bullish analysts raise price targets in response to Flutter's robust Q2 performance. Ongoing strength in the U.S. market is supporting higher full-year guidance.
- Flutter's partnership strategy is highlighted as thoughtful and efficient. This positions the company to capitalize on opportunities in the evolving prediction markets space without excessive cost or regulatory risk.
- The company's diversified offerings and superior pricing, especially across parlays and player props, are seen as key differentiators. These factors help defend market share even amid new competitors and products.
- Many expect continued EBITDA and revenue growth over the next several years, with catalysts such as ongoing share buybacks, product innovation, and potential index inclusions seen as supportive to the stock's valuation.
- Bearish analysts caution that September was a particularly challenging month for sports betting margins. Unfavorable game outcomes and player props are likely to drag actual margins below expectations for the quarter.
- There are concerns around heightened state taxes and legislative changes, which could offset earnings improvements and introduce ongoing uncertainty for the group.
- Some warn that the proliferation of new prediction market entrants could add pressure to maintain growth rates, even though direct impact on market share may be limited.
- Analysts note that recently revised outlooks and sector-wide headline risks, such as regulatory pressures and slowing handle growth, could temper valuation multiples if challenges persist into future quarters.
What's in the News
- Flutter Entertainment is reportedly in advanced discussions to acquire an additional 5% stake in FanDuel from Boyd Gaming for close to $2 billion. An agreement may be announced soon (Sky News).
- Jefferies analysts note that DraftKings is likely to enter the prediction markets sector following Flutter's partnership with CME Group. DraftKings could pursue a different approach by acquiring Railbird (Jefferies via research note).
- Flutter has completed repurchasing 2.59 million shares for $651.27 million as part of its ongoing buyback program. This represents 1.46% of total shares (Company filing).
- The company has raised its 2025 revenue guidance to $17,260 million, up from previous expectations of $17,080 million (Company announcement).
Valuation Changes
- Consensus Analyst Price Target (Fair Value) has fallen slightly, decreasing from $345.10 to $341.53.
- Discount Rate has edged down marginally, moving from 8.97% to 8.97%.
- Revenue Growth expectations have risen slightly to 16.53% from the prior 16.44%.
- Net Profit Margin forecast has decreased modestly to 10.24% from 10.53%.
- Future P/E ratio has increased, moving from 30.66x to 31.14x.
Key Takeaways
- Expansion in new markets, product innovation, and platform integration are expected to drive user engagement, market share, and sustained earnings growth.
- Structural cost efficiencies and deeper iGaming penetration should enhance margins, free cash flow, and shareholder returns over the long term.
- Rising regulatory risks, high debt from acquisitions, integration challenges, slowing growth in mature markets, and demographic shifts threaten profitability and long-term expansion.
Catalysts
About Flutter Entertainment- Operates as a sports betting and gaming company in the United States, the United Kingdom, Ireland, Australia, Italy, and internationally.
- Ongoing expansion of online gambling and iGaming in newly regulated and high-growth markets (e.g., Brazil and the U.S.) is expected to accelerate Flutter's revenue and earnings, leveraging increasing global internet and smartphone penetration and regulatory liberalization.
- Product innovation-particularly in live betting and personalized betting features (e.g., "Your Way Parlay," Same Game Parlay Live, and platform migrations across Snai and FanDuel)-positions Flutter to capture greater user engagement and wallet share, supporting both revenue growth and long-term margin expansion.
- Integration of recent acquisitions (Snai in Italy, NSX in Brazil) and the realization of platform migrations are expected to unlock substantial cost synergies and efficiency gains, underpinning higher EBITDA margins and sustained earnings growth from improved operational leverage.
- Structural cost efficiencies, evidenced by reduced sales and marketing as a percentage of revenue and successful renegotiation of market access agreements (e.g., Boyd), should drive higher net margins and enhanced free cash flow, supporting shareholder returns through buybacks.
- Rising direct-to-casino iGaming penetration and exclusive content launches through FanDuel and global platforms are expected to increase market share in iGaming, with a long runway for growth as digital entertainment becomes an entrenched consumer preference, boosting both revenue and retention.
Flutter Entertainment Future Earnings and Revenue Growth
Assumptions
How have these above catalysts been quantified?- Analysts are assuming Flutter Entertainment's revenue will grow by 16.4% annually over the next 3 years.
- Analysts assume that profit margins will increase from 2.5% today to 10.5% in 3 years time.
- Analysts expect earnings to reach $2.5 billion (and earnings per share of $14.46) by about September 2028, up from $366.0 million today. However, there is a considerable amount of disagreement amongst the analysts with the most bullish expecting $3.0 billion in earnings, and the most bearish expecting $1.7 billion.
- In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 30.7x on those 2028 earnings, down from 141.4x today. This future PE is greater than the current PE for the GB Hospitality industry at 24.0x.
- Analysts expect the number of shares outstanding to decline by 1.09% per year for the next 3 years.
- To value all of this in today's terms, we will use a discount rate of 8.97%, as per the Simply Wall St company report.
Flutter Entertainment Future Earnings Per Share Growth
Risks
What could happen that would invalidate this narrative?- Increasing regulatory scrutiny and taxation risk in major markets, as highlighted by Illinois' wager fee and ongoing tax changes in Illinois, Louisiana, and New Jersey, could reduce profitability and net margins if more states or international markets adopt similar or harsher measures.
- High and rising net debt, currently at $8.5 billion (3x adjusted EBITDA including Snai), and continued acquisitions pose long-term financial risk. Increased leverage may limit flexibility, and persistent high debt levels could pressure future earnings and shareholder returns.
- Integration risks and cost synergies from recent major acquisitions (notably Snai and NSX in Italy and Brazil), as well as the migration of technology platforms and brands (such as PokerStars and Sky Bet), may not materialize as planned, risking margin compression and lower than expected synergy-driven EBITDA growth.
- Exposure to maturing or saturated markets: While core regions like Southern Europe and Australia are currently performing well, growth in mature markets is slowing and future expansion relies on expensive new market entries (such as Missouri) or product innovation, which could dilute returns and hinder long-term revenue growth.
- Long-term secular risks include shifting demographic and consumer trends, such as potential declines in gambling interest among younger generations, and persistent social and regulatory concerns about gambling addiction, which could tighten restrictions and limit Flutter's customer base and long-term revenue trajectory.
Valuation
How have all the factors above been brought together to estimate a fair value?- The analysts have a consensus price target of $345.104 for Flutter Entertainment based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $393.0, and the most bearish reporting a price target of just $267.0.
- In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $23.5 billion, earnings will come to $2.5 billion, and it would be trading on a PE ratio of 30.7x, assuming you use a discount rate of 9.0%.
- Given the current share price of $294.43, the analyst price target of $345.1 is 14.7% higher.
- We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.
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Disclaimer
AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.
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