UBS reiterates Buy rating on Flutter Entertainment stock at $340 target

UBS reiterated its Buy rating on Flutter Entertainment (FLUT) with a $340 price target, driven by the online gambling company's strong recovery and robust U.S. operational performance. The firm expects Flutter to exceed Q2 analyst expectations for revenue and EBITDA, primarily from U.S. growth, and maintain its FY2025 earnings guidance despite new tax challenges. With a projected 17% compound annual growth rate through 2029 and trading at approximately 12 times its estimated fiscal year 2026 EBITDA, UBS considers FLUT an attractive investment opportunity, supported by reduced U.S. tax concerns and positive state data.

Analysis

UBS has reiterated its 'Buy' rating and a $340 price target for Flutter Entertainment (FLUT), reflecting strong confidence in the online gambling company's growth trajectory, particularly within its U.S. operations. This positive outlook is supported by a significant stock recovery, with shares gaining 22% over the past three months and 44% over the past year, driven by dissipating concerns over U.S. tax issues and favorable state-level data. Ahead of its August 7 earnings report, UBS anticipates Flutter will surpass consensus estimates for Q2 revenue and EBITDA and maintain its fiscal 2025 guidance despite new tax challenges. The company currently trades at approximately 12 times its estimated fiscal 2026 EBITDA, a valuation UBS deems attractive given a projected compound annual growth rate of 17% through 2029. While other analysts offer a more mixed view—with Bernstein noting potential UK regulatory risks and HSBC maintaining a 'Hold' rating—the consensus highlights strong U.S. market performance through its FanDuel subsidiary. Flutter's recent strategic appointments in public affairs also signal a proactive approach to navigating the evolving policy landscape.

Key Decisions for Investors

• Investors aligned with a bullish outlook on the U.S. online gaming sector could view the current valuation as an attractive entry point, given UBS's projection of a 17% CAGR through 2029 and the stock's strong recent momentum.
• It is critical to monitor the upcoming Q2 results on August 7, as continued outperformance in U.S. operations will be necessary to validate the bullish thesis and offset headwinds from new U.S. tax challenges and potential UK regulatory changes.
• Consider the divergent analyst ratings as a signal of a balanced risk-reward profile; while UBS and JMP are optimistic, the cautious stances from Bernstein and HSBC underscore the importance of ongoing due diligence regarding regulatory risks in key markets.