Flutter Entertainment (OTC: PDYPY) Shares Could Rally as Analyst Sees Upside

Shares of Flutter Entertainment have seen a 13.77% increase year-to-date but have entered a bear market in the past six months. However, one analyst believes that the downturn is overdone and positive catalysts are on the horizon for the stock.

In a note to clients, HSBC analyst Joseph Thomas reiterated a “buy” rating on the company, with a price target suggesting a 25% upside from current levels. Thomas points out that Flutter is attractively valued and trading at an estimated 16x 2025 enterprise value/earnings before interest, taxes, depreciation, and amortization (EV/EBITDA), with a free cash flow yield of 7%.

Thomas stated, “That doesn’t strike us as being expensive for a group that can continue to deliver good growth as it absorbs some of the one-off issues.”

These one-off issues include softness in Australia, foreign currency headwinds, good luck for bettors in the third quarter, and some regulatory and tax issues in the UK. Flutter’s rivals have also faced similar challenges, with softness in Australia and UK regulatory hurdles.

The U.S. presents a range of opportunities for Flutter, particularly with its 95% ownership of FanDuel. FanDuel is a key player in the U.S. online sports betting market and is gaining traction in the iGaming space. The company plans to list shares on the New York Stock Exchange (NYSE) in the first quarter of 2024.

Thomas notes that most of Flutter’s enterprise value is currently attributable to the operator’s U.S. arm, which is delivering more rapid growth than other markets. FanDuel is on track to achieve annual profitability this year, making it the first U.S. internet sportsbook operator to do so. This alone could drive Flutter’s stock higher.

The upcoming NYSE listing is also expected to have a significant impact on the stock. Currently trading on an over-the-counter basis, the move to the major exchange will broaden the audience for Flutter stock and make it easier for the company to raise capital if needed.

While Flutter’s stock has faced challenges in recent months, the forecast for positive growth in the U.S. market, alongside the upcoming listing on the NYSE, presents an optimistic outlook for the company’s future performance.

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