Flutter Entertainment (NYSE: FLUT) has received praise in new coverage by Morningstar, with the research firm highlighting the gaming company’s effective capital allocation, in-house product development, and robust risk management capabilities.
In a note released today, analyst Dan Wasiolek initiated coverage of the parent company of FanDuel with a four-star rating (out of five) and a fair value estimate of $250, suggesting a potential upside of 18.4% from the current closing price.
“Flutter’s launch of a daily fantasy sports product in July 2009 provided a first-mover advantage, positioning the company to capitalize on the 2018 Supreme Court ruling that legalized sports and iGaming wagering in the US. As a result, Flutter now commands a dominant 40% share of digital revenue in the US,” wrote Wasiolek.
Flutter owns 95% of FanDuel, which forms half of the US online sports betting (OSB) duopoly, alongside DraftKings (NASDAQ: DKNG). While these two companies are often compared, their stock performance has diverged. Year-to-date, shares of FanDuel’s parent are up nearly 18%, while DraftKings has declined by 4.54%.
Flutter’s Global Operations Strengthen Its Stock Appeal
FanDuel is one of the most valuable and recognizable brands in the gaming industry, particularly among US daily fantasy sports (DFS) participants and sports bettors. However, many American bettors and investors may be unaware that Flutter also has substantial operations outside the US.
This diverse portfolio has allowed Flutter to capture significant market share in mature markets outside the US.
“Flutter’s decades of experience in product development and risk management have secured top revenue shares outside the US, holding 29% and 46% of online gaming revenue in the mature markets of the UK and Ireland (26% of 2023 sales) and Australia (12%), respectively,” added Wasiolek.
The analyst also noted that Flutter has successfully integrated its parlay offerings and technology into Sisal since acquiring the firm in 2022, boosting its revenue share in Italy. Italy is a key market for Flutter, being the Eurozone’s third-largest economy and Europe’s largest regulated gaming market after the UK.
Flutter Thrives Across Multiple Markets
As smaller operators exit the US OSB market and mid-sized players struggle to compete with FanDuel and DraftKings, Flutter is demonstrating strong earnings potential both in the US and internationally.
The company is achieving this with expanding earnings before interest, taxes, depreciation, and amortization (EBITDA) margins.
“Despite stringent regulation and market maturation in the UK and Australia, Flutter’s segments in these regions still maintain over 20% EBITDA margins,” concluded Wasiolek. “The aggressive entry of ESPN Bet into the US market in recent months has not hindered Flutter’s FanDuel brand from gaining market share or expanding its EBITDA margins.”
Discover the premier destination for the best online betting site in Singapore with Octabet betting news. Begin your journey to victory today! Register now!