Morgan Stanley sees 31% upside for Flutter shares after impressive quarterly results
On Wednesday, a Morgan Stanley analyst increased the price target for Flutter Entertainment Plc (FLTR:LN) (NYSE: FLUT) shares to £191.00 from the previous £180.00, while keeping an Overweight rating on the stock.
The revision follows Flutter’s strong second-quarter performance, which saw revenues climb to $3,611 million, a 20% increase, and adjusted EBITDA reach £738 million, up 17%. These figures surpassed both Visible Alpha consensus and the firm’s projections by 7/6% and 14/16% respectively.
The analyst highlighted that Flutter’s performance exceeded expectations, particularly in the US, where adjusted EBITDA of $260 million was 36% above the consensus.
This strong showing led to an upward revision of both ex-US and US forecasts by 2/4% at the mid-point. This includes the assimilation of a $40 million net impact from Illinois tax changes and an additional $20 million allocated to high ROI investments.
Due to the robust quarterly results, Morgan Stanley has upgraded its EPS forecasts for Flutter for the fiscal years 2024, 2025, and 2026 by 5/3/3%.
The upgrades are net of a slight drag from interest costs. The new £191 price target represents a 31% upside to the stock’s last closing price, and the analyst reaffirmed Flutter as their top pick within the gambling sector.
The positive outlook is based on Flutter’s recent financial achievements and the adjustments made to future earnings projections. The company’s strong performance in key markets, especially the United States, has been a significant driver for the optimistic valuation and the maintained Overweight rating.
InvestingPro Insights
As Flutter Entertainment Plc continues to impress with its financial performance, real-time metrics and InvestingPro Tips provide further context for investors considering the stock. According to InvestingPro data, Flutter has a market capitalization of $37.24 billion, with a notable revenue growth of 19.29% over the last twelve months as of Q1 2024. This growth underpins the analyst’s positive outlook and supports the upward revision of Flutter’s price target.
InvestingPro Tips suggest that net income for Flutter is expected to grow this year, which aligns with the analyst’s forecast and could be a driving factor for the stock’s future performance. Additionally, the fact that two analysts have revised their earnings upwards for the upcoming period further bolsters confidence in the company’s potential. It’s worth noting, however, that short-term obligations exceed liquid assets, indicating potential liquidity concerns that investors may need to monitor.
For those seeking a deeper dive into Flutter’s financials, InvestingPro offers additional tips, with a total of 9 tips available, including insights on profitability and valuation multiples. These tips can be accessed through the InvestingPro platform and may provide valuable guidance for both short-term trading and long-term investment strategies.
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