Analysts at Citi have cut their earnings per share (EPS) forecasts for UK gaming blue-chips Entain PLC (LSE:ENT) and Flutter Entertainment PLC (LSE:FLTR) in a preview of upcoming third-quarter (3Q22) results from the sector.
The US bank's analysts said while they have left Entain and Flutter’s operational forecasts largely unchanged, full-year 2022/23 EPS estimates have been cut by 3% to 12% reflecting rising interest costs, not yet factored into consensus.
They said that having analysed, with Citi’s Innovation Lab, web traffic trends to derive 3Q22 growth forecasts and 1,963 sports events across UK/Australia to forecast 3Q22 win margins they are more bullish than consensus on UK, Australian and US win margins, which should cushion lacklustre wagering growth.
For Flutter, the analysts noted that UK and Ireland Online and Australia wagering and iGaming NGR growth looks challenging in 3Q22, while July/August US state data suggests a stand-out performance in Sports (+27% above Q3 consensus revenue) adding that they are +10% versus consensus for 3Q22 revenue.
For Entain, the analysts said that recent ex-US web traffic trends appear more robust, with recent US data in-line with consensus expectations and they are +2%/-2% different to consensus on 2H22 revenue/EBITDA.
The Citi analysts repeated a 'buy' rating on Entain and kept Flutter as 'neutral'.