Flutter Entertainment PLC (LON:FLTR), the owner of Paddy Power, has been downgraded to ‘sector perform’ from ‘outperform’ by analysts at RBC following a strong share price run as the Canadian bank reassessed its view of three London-listed gambling firms.
In a note on Monday, RBC also upped its target for Flutter to 12,500p from 12,000p, saying that the company is “a high quality operator” and its acquisition of Canadian gambling firm The Stars Group in May has catapulted the company “into becoming a more diversified, global-scale player”. The bank also said FanDuel, Flutter’s fantasy sports brand, has made “a flying start in the US”.
“The stock has had a great run, and we believe the positives are well known. We nudge up our [target price]…but downgrade to Sector Perform while we watch for additional catalysts in future”, RBC concluded.
William Hill target cut, GVC raised
Meanwhile, RBC decided to cut its target price for rival bookie William Hill PLC (LON:WMH), to 272p from 300p and retained their ‘sector perform’ rating, saying the new target was the same per share value as the £2.9bn takeover offer from US casino operator Caesars Entertainment Inc (NASDAQ:CZR) made in September.
“We believe that an acquisition of William Hill by Caesars Entertainment is the most likely eventuality - and makes sense for the group”, RBC said.
RBC said recent accelerating momentum in the US and GVC’s “strong track record in its core business” gave them confidence in the trajectory of the company’s BetMGM joint venture (JV) in the US.
“We increase significantly the value we assign to the US JV”, the bank said, adding that they believed GVC “continues to offer the best value vs peers”.
Shares in Flutter were 1.4% lower at 12,320p in mid-morning trading on Tuesday, while William Hill was down 0.2% at 276p and GVC rose 0.1% to 992.3p.