Analysts raised their targets on FanDuel parent Flutter‘s stock as the company raised guidance on strong US results that outweighed new tax increases.
Barry Jonas of Truist raised his target to $350 (+$10) while Jeffrey Stantial of Stifel now has a target of $356 (+$3) with both maintaining their buy ratings.
FanDuel should now report $1.245 billion in adjusted EBITDA on $7.580 billion in revenue at their midpoints, with those figures up $115 million and $180 million, respectively.
Despite the positive US momentum reported Thursday afternoon, Flutter’s stock fell in after-hours trading and opened Friday down 4.7% at $291.61.
Sports results help boost FanDuel guidance
Flutter incorporated four factors into its guidance update:
- Lucky sports outcomes in May and June accounted for the largest share of the improved forecast. Those results brought in $140 additional revenue which flowed through to $100 million in adjusted EBITDA.
- Flutter renegotiated its market access costs with Boyd after it dished out nearly $1.8 billion to buy the 5% of FanDuel Boyd owned from its original market access agreement signed in 2018. Those renegotiated terms will save $35 million in adjusted EBITDA this year.
- The Dec. 1 launch of Missouri sports betting is later than Flutter expected when giving guidance initially. The company now expects adjusted EBITDA to be negatively impacted by $70 million, not $90 million, which bumps guidance up $20 million.
- Also unexpected at the time of previous guidance was the multiple tax increases in Illinois, Louisiana and New Jersey. Those will drag adjusted EBITDA by $40 million in the second half of 2025.
Breaking down state impact on FanDuel
Illinois will only be a net cost of $5 million because of the $30 million offset by its 50-cent service charge that begins Sept. 1.
New Jersey and Louisiana will combine for a net cost of $35 million. About 20% of cost is offset by “locally optimized promotional and marketing spend.”
Strong US operations in Q2
Stantial noted that even without the $100 million from lucky sports results, the $300 million in adjusted EBITDA still would have beat his forecast by 9% as well as the prior guidance of $250 million.
FanDuel saw revenue grow 17% in the quarter with an 11% improvement from sports betting. Live betting helped drive handle up 7% and accounted for more than half of all handle during the quarter.
Online casino revenue jumped 42% as average monthly players grew 32% with player frequency up year-over-year. The segment improved thanks to the continued strength of direct casino user acquisition as well as continued cross-sell from sports betting and improved content and daily rewards.
While Stantial still thinks FanDuel could lose from online casino market share, its “product development velocity” is keeping its top 27% gross revenue share stable for now with more positives, like first party games, still to launch.
