Flutter Entertainment PLC (LSE:FLTR) reported a stronger-than-anticipated performance in the second quarter to June, consistent with rival Entain, prompting an upward revision of its full-year guidance, notes Shore Capital.
Key standouts include the US market, which grew by 39%, the UK (+17%), bolstered by the Euros, and International, up 17% (driven by strong performance in Italy), with Australia being the weak spot.
“We view the continued reduction in marketing intensity in the US as a key positive, with the potential to enhance operational leverage and attractive margins,” said Shore Cap.
Valuing its US operations at similar metrics to its closest competitor, DraftKings (3x NGR), FanDuel is estimated at $18bn, leaving the remainder of its international operations valued at 11x current year adjusted EBITDA, said Shore Cap.
This valuation would be at the upper end of what shore Cap believe it arguably deserves, but the broker suggests there could be further upside to the FanDuel valuation as the revenue base continues to grow.
'Hold' with a target of £140/share is Shore Cap's view.
Flutter is holding an investor event in September, where it will outline its capital allocation framework and growth opportunities.