Sports Betting Company Flutter Gets Buy Rating During NFL Playoffs: 'Core Multi-Year Holding'
Friday, Jan 17, 2025 12:39 pm ET
1min read As the NFL playoffs unfold, sports betting company Flutter Entertainment (FLUT) has received a 'Strong Buy' rating from analysts, highlighting the company's resilience and long-term growth potential. Despite facing headwinds from unfavorable sports results, Flutter has demonstrated a strong performance, maintaining its status as a 'core multi-year holding.'
Flutter's ability to maintain strong player momentum and a structural revenue margin increase is commendable, as the company's parlay product optimization led to a 100 basis points year-over-year increase in structural revenue margin to 14.5%. This underlying strength in the business model positions Flutter well for margin recovery when sports results normalize. The company's disciplined risk management, as evidenced by a reduction in promotional spending, has helped maintain market share despite the headwinds.
The transitory nature of the unfavorable sports results has no impact on the underlying assumptions and guidance expectations communicated at Flutter's Investor Day in September. The company remains confident in its growth drivers and long-term growth trajectory, with the 2027 revenue and Adjusted EBITDA guidance provided at the Investor Day remaining unchanged.
Flutter's revised expectations include a Q4 sportsbook net revenue margin of 6.6%, reflecting a structural revenue margin of 14.5% and unfavorable sports results of 390 basis points. The Group Ex-US segment showed positive performance, with UK and Ireland operations demonstrating good momentum and favorable sports results in the English Premier League.
The estimated total addressable market (TAM) for Flutter Entertainment by 2030 is $368 billion, with a forecast compound annual growth rate (CAGR) for global gross gaming revenue (GGR) of 8%. This growth potential, combined with Flutter's strong performance during the NFL playoffs, makes the company an attractive investment opportunity for long-term investors.
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