Published at 02:38, March 19, 2023
Last update: March 19, 2023 at 02:38h
Flutter Entertainment, OTC: PDYPY), is based in Dublin. However, analysts and professional investors believe that the company’s US exposure could support greater upside in the shares.
The bulk of the operator’s US footprint its attributable to its 95% stake in FanDuel. The remaining 5% is owned by Boyd Gaming (NYSE, BYD). FanDuel controls roughly half of the US sports betting market. This is more than the two closest competitors combined. Flutter, which provides spors betting services in 17 US states, was the first to report a profit quarter. It is also on track to achieve the same annual result.
Flutter shares still experienced a ceiling due to the fact that Flutter’s other brands, including Paddy Power, BetFair and Poker Stars, are largely based outside of the US. Investors view Flutter as dependent on Australia and Europe to drive revenue and earnings, despite its 95% stake in FanDuel. In the process, those investors assign a discount of sorts to the FanDuel stake.
Flutter May Have a Solution
Last month, Flutter told investors it’s mulling a New York listing of its shares. Flutter shares currently trade in the US, but on an over-the-counter basis, meaning the audience of both professional and retail investors in the states engaged with the stock isn’t as large as it would be if the name traded on the Nasdaq or the New York Stock Exchange (NYSE).
Susquehanna analyst Joe Stauff believes such a move will occur in the fourth quarter and will be a “value-creating event” for Flutter investors, in effect removing a 20% conglomerate discount investors assign to FanDuel, according to Barron’s.
We recently announced that we believe an additional US listing of Flutter’s ordinary shares will yield a number of long-term strategic and capital market benefits,” said Flutter CEO Peter Jackson in a statement. We have started extensive consultations with our shareholders, and the early feedback has been positive. Flutter could also benefit from a US listing. Investors might be less keen to see FanDuel spun out by the gaming company, which could dampen their enthusiasm. Flutter may trade in the US if the parent owns FanDuel. This is due to FanDuel’s strong brand recognition in America. However, international market participants can’t ignore Flutter operations outside of the US. Those businesses proved sturdy in the latter stages of 2022.
Additionally, if upcoming UK gaming reform isn’t as harsh as expected, that could be another catalyst for London-listed gaming equities, including Flutters. And the stock isn’t pricey.
It trades at “24.7 times estimated 2024 earnings, lower than an average of around 34 times among a basket of competitors, according to FactSet data,” reports
Barron’s
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