Jefferies has maintained its 'buy' rating on Flutter Entertainment PLC (LSE:FLTR, NYSE:FLUT), the online gambling group behind FanDuel and Paddy Power, while cutting its price target nearly in half from $380 to $210, arguing the stock has been de-rated to levels that imply no future growth in its core US market.
The broker cut its earnings before interest, tax, depreciation and amortisation (EBITDA) estimates by between 13% and 19% across 2026 to 2028, with US forecasts reduced by 21% to 28%, following full-year results last week that revealed margin pressures from NFL betting and insufficient promotional efficiency.
Despite the cuts, Jefferies argued the market has overreacted, with Flutter now trading at eight times 2027 EBITDA against a projected five-year EBITDA compound annual growth rate of 16%.
The broker's reverse discounted cash flow analysis, a technique that works backwards from a current valuation to establish what growth rate the market is pricing in, implies zero future US growth, a scenario Jefferies described as contradicted by available evidence.
Flutter attributed the recent slowdown in US handle, the total amount wagered, to customer recycling patterns, an unfavourable sports calendar and inefficient promotional spending, all of which the broker characterised as reversible rather than structural.
On prediction markets, a new form of event-based wagering that some investors fear could cannibalise traditional sports betting, Flutter said it sees no evidence of meaningful impact, estimating the effect at low single digits percentage-wise.
Jefferies pointed to Flutter's successful launch in Missouri, a state where prediction markets launched ahead of traditional sports betting, as evidence the two products serve different customer needs, with Flutter signing up 5% of the state's population within 30 days.
The broker lowered its medium-term US target to $3.25 billion EBITDA by 2030, compared with $4.1 billion previously, reflecting more conservative assumptions on population penetration and margin progression.
The shares were up around 1% at 8,609.64p.