Flutter dives on guidance cut, flurry of analyst price target cuts
Flutter Entertainment, the parent of top US online sports betting app FanDuel, tumbled in early trading after it cut revenue guidance as part of a disappointing earnings report issued yesterday after the close.
The company also surprised some on Wall Street with the amount it plans to spend — $45 million in Q4 and between $200 million and $300 million next year — on its own prediction markets push, as the sports betting business attempts to fend off emerging competitive pressure.
Bank of America analysts, who recently downgraded their rating of the stock to “neutral,” said such spending “is materially higher than our and investor expectation. Strategically, we think this step-up investment could be warranted given the total addressable market, but also confirms we are entering an investment phase” for the industry that may be “a tough period for [online sports betting] operator profitability.”
According to FactSet data, 14 analysts have trimmed their Flutter price targets since the report was released, taking the consensus 12- to 18-month bogey for the stock from over $330 to less than $320, which is still a more than 50% premium to the market — and widening by the minute.
Bank of America analysts, who recently downgraded their rating of the stock to “neutral,” said such spending “is materially higher than our and investor expectation. Strategically, we think this step-up investment could be warranted given the total addressable market, but also confirms we are entering an investment phase” for the industry that may be “a tough period for [online sports betting] operator profitability.”
According to FactSet data, 14 analysts have trimmed their Flutter price targets since the report was released, taking the consensus 12- to 18-month bogey for the stock from over $330 to less than $320, which is still a more than 50% premium to the market — and widening by the minute.
