Flutter Entertainment's growth driven by US operations which saw a 55.6% revenue surge. Bank of America names it top pick while Goldman Sachs forecasts doubling of earnings by 2026.
ADVERTISEMENTThe world's leading online sports betting and iGaming operator, Flutter Entertainment, has revealed its financial results for the fiscal year ended December 31, reporting a 24.6% rise in global revenue and a 20.3% surge in average monthly players.
The US market in particular stands out as a powerhouse for Flutter, showcasing a 55.6% year-on-year revenue growth. The surge has been attributed to structural enhancements in sportsbook net revenue margins, reduced promotional expenses in Ohio compared with the previous year and notable product improvements in iGaming.
Outside the US, the company saw a more modest revenue growth of 6.3%, indicating a broad, albeit uneven, global performance.
Richard Hunter, head of markets at Interactive Investor, highlighted the US as Flutter's growth linchpin, noting its number one sportsbook position with a 53.4% net gaming revenue market share in the final quarter of the year. The FanDuel business alone captured a 26% share in the same period, underscoring Flutter's commanding presence in the sector.
According to Hunter, Flutter's brand portfolio, including FanDuel, Sky Betting & Gaming, PokerStars, Sportsbet, Sisal and Betfair, among others, taps into a vast addressable market, previously estimated to expand beyond $40 billion (€36.7 billion) by 2030.
Earnings boosted by rise in average monthly players
"The UK business, which includes the likes of Paddy Power and Betfair and which accounts for 26% of group revenues saw a strong trading period after a period of strong marketing investment and customer and engagement," Hunter said.
A critical factor in Flutter's earnings boost is the 20.3% increase in average monthly players, now totalling 12.3 million. The company is focused on optimising the cost of customer acquisition and reducing its net debt, which slightly increased to $5.8 billion (€5.34 billion).
However, a net loss of $1.2 billion (€1.1 billion) was reported, primarily due to significant non-cash charges, including impairment write-downs. Excluding these charges, adjusted group earnings surged by 45% to $1.87 billion (€1.72 billion) substantially exceeding expectations.
"Flutter is firing on its US growth cylinders and is also lining up its other existing regions to produce significantly profitable returns," Hunter added.
Wall Street analysts are overly bullish on Flutter
Wall Street analysts are overwhelmingly optimistic about Flutter's prospects. Among 27 analysts covering the stock, 23 have bestowed it with a "Strong Buy" rating, reflecting a widespread bullish sentiment.
The average 1-year price target for Flutter currently sits at $234,92 (€217,42), suggesting an 8.6% upswing from present levels. Projections range from a conservative estimate of $199.1 (€184), indicating a potential 7.8% loss, to an ambitious estimate of $344.98 (€319.27), implying a remarkable 59% surge.
Revenue forecasts paint a rosy picture, with expectations of reaching £5.2 billion (€4.44 billion) by the close of the first semester of 2024, and £5.41 billion (€4,69 billion) by year-end. These projections signify growth rates of 11% and 15%, respectively.
Bank of America Securities has identified Flutter as the "Key Stock Pick for 2024" within the European Media and Gaming sector.
Analysts Kiranjot Grewal believes that Flutter's FanDuel business places it in the best position to capture market share in the liberalising US sports betting market. As the largest listed online gaming operator, Flutter provides an attractive gateway to the expanding global online gaming industry, according to Bank of America.
Goldman Sachs predicts a transformative phase for Flutter's earnings profile, emphasising the imminent profitability of its US division in 2024. This division is predicted to become the primary driver of earnings growth for the company, propelling a doubling of group EBITDA over the next three years (2023-26E).
