Analysts see buying opportunity following FanDuel parent stock selloff

Shares of Flutter Entertainment (FLUT) are on the rise on Monday, recovering some of Friday’s losses when the shares underperformed on tax concerns. Treasury officials in the U.K. were said to be weighing proposals, put forward by two influential thinktanks and backed by one of the Labour party’s top five individual donors, to double some of the taxes levied on online casinos and bookmakers. Benchmark views the 9% stock decline last week as “an ideal opportunity to capitalize on the pullback” given its expectations for “a far less severe outcome” than feared.

Voicing a similar opinion, Wells Fargo said Friday’s selloff reflects an “unlikely near-worst case” U.K. tax scenario and minimal offset, and upgraded Flutter to Overweight. Meanwhile, BofA reinstated coverage of the name with a Buy rating and Street-high $300 price target and added the stock to BofA’s “Europe 1” list of top ideas.

BUYING OPPORTUNITY: After news emerged on Friday out of the United Kingdom saying Treasury officials were weighing proposals to double some of the taxes levied on online casinos and bookmakers, Flutter’s stock fell nearly 9% amid speculation of increased taxes on online gaming. Benchmark views this decline as “an ideal opportunity to capitalize on the pullback” given its expectations for “a far less severe outcome” than feared. After having met with CEO Peter Jackson and IR Director Paul Tymms at G2E, the firm was “very impressed with the U.S. and broader North American secular expansion opportunities” and felt confident that the company will “continue to lead in product innovation for years to come,” added the Benchmark, which reiterated a Buy rating and a $265 price target on Flutter shares.

BUY FLUTTER: Wells Fargo upgraded Flutter Entertainment to Overweight from Equal Weight with a price target of $295, up from $224, implying 34% upside. Friday’s selloff reflects an “unlikely/near-worst case” U.K. tax scenario and minimal offset, the firm told investors in a research note. With confidence FanDuel will increase structural hold to 15% in fiscal 2027, Wells says one can arrive at Flutter’s targeted fiscal 2027 revenue targets on fairly conservative assumptions.

Meanwhile, BofA reinstated coverage of Flutter Entertainment with a Buy rating and Street-high $300 price target and added the stock to BofA’s “Europe 1” list of top ideas. The firm says the 35% upside potential implied by its price target is premised on FanDuel’s “unique positioning and vigorous market backdrop,” which leads it to put its estimates 18% ahead of 2027 consensus. BofA also cites “large value creative opportunities,” with Brazil being the last example and what it calls “mispriced growth potential.”

GREATER CONFIDENCE: Flutter’s September Investor Day was another pivotal moment demonstrating where the online gaming industry is heading and how investors should be positioned to back the winners, MoffettNathanson says. Upon digesting the day further, the firm now has greater confidence in the outlook for Flutter both outside the U.S. and in the U.S. with FanDuel, as well as positive takeaways for DraftKings (DKNG). The U.S. opportunity for online sports betting, or OSB, and iGaming is much larger than MoffettNathanson had initially anticipated, with strong momentum in existing markets.

In 2030, the firm now expects a total U.S. TAM of nearly $53B driven by combined U.S. OSB and iGaming GGR from existing states to exceed $36B, with incremental legalization expected to drive an additional $16B of combined GGR. Both FanDuel and DraftKings should be able to flex their structural advantages over the rest of the pack in terms of pricing accuracy and bet mix while maintaining industry-leading hold rates, driving GGR growth even if handle slows, MoffettNathanson says. The firm reiterates Buy ratings for Flutter and DraftKings.

PRICE ACTION: In Monday afternoon trading in New York, shares of Flutter have gained over 4% to $229.21.