Flutter shares up on strong Q2 and upbeat outlook

Investing.com -- Shares of Flutter Plc (LON:FLTRF ) (NYSE:FLUT ) jumped on Wednesday after the company reported a strong second-quarter performance, exceeding market expectations.

At 5:25 am (0925 GMT), Flutter was trading 8.1% higher at £15,835.

“A consistent story of growth and market share gains is not reflected in the current Flutter valuation,” said analysts from Jefferies in a note. 

The company's compound Group EBITDA growth rate is projected at around 20% until 2030, with a forward EV/EBITDA multiple of 12.3x for FY25E and a 4.5% free cash flow yield.

The US market remains a key driver for Flutter, with positive cohort development, higher hold rates, and market share gains. The company increased its US EBITDA guidance by $30 million, offsetting a $50 million hit from a new Illinois tax. 

Furthermore, Flutter's online growth in pre-2022 states reached 33%, with strong performance in both sports betting and iGaming.

Outside the US, Flutter also demonstrated robust growth, with particular strength in the UK and Ireland, Italy, Georgia, Spain, and Brazil. While Australia faced challenges in racing, the sports betting segment showed promising signs.

Flutter's decision to moderate generosity and local marketing to mitigate increased taxes in the US, rather than introducing a surcharge, was well-received by investors. The company expects to offset 50% of the tax cost in FY25E.

Jefferies flagged Flutter's strong financial position, with a net debt to EBITDA ratio of 2.6x, nearing the target range of 2.0-2.5x. The brokerage expects share buybacks from FY26E onwards due to substantial surplus cash flow. 

Source: Investing.com