Flutter Entertainment PLC's (LSE:FLTR, NYSE:FLUT) first-quarter update has done little to shift the central debate around the stock: whether the US growth story is stalling, or simply paused.
On the face of it, the numbers were solid, with revenue and earnings slightly ahead of expectations. However, the shares fell as full-year guidance was trimmed, though broadly it remained in line with consensus.
This brings more attention to the group's valuation, flagged by US investment bank Jefferies.
The shares now trade at around 8 times forward earnings, a sharp de-rating from 15 times previously. More strikingly, analyst James Wheatcroft said, a reverse discounted cashflow model is "implying zero future US growth".
That scepticism reflects concerns around recent trends, with total US stake growth down 9% in the quarter, though the company insists this is “primarily… non-structural”, pointing to recycling effects and timing of promotions.
There are signs of stabilisation. US handle improved through the quarter and management expects momentum to pick up from the second quarter, helped by new products, loyalty initiatives and major sporting events.
Attention is also turning to new growth levers, with the new prediction markets product under the FanDuel brand generating “modest” revenues in the quarter, with early trials described as “encouraging” ahead of a fuller rollout expected later this year.
For now, the market appears unconvinced.
Wheatcroft said: "We continue to see an appealing set-up”. He expects fresh content, the FIFA World Cup and new products to drive engagement through the year, alongside a sharper US focus following recent management changes.
He pointed to “supportive features” including loyalty roll-outs, product launches and cost savings, suggesting the current backdrop could still support growth despite investor scepticism.
Jefferies rates Flutter at 'buy' with a price target of $210 in the US and 16,000p in London, where the shares dropped 4% to just under 7,300p by early afternoon on Thursday, down more than 50% since the start of the year.