Analysts remain bullish on Flutter but cut their targets as the company lowered guidance for FanDuel with more promotional investment coming.
Flutter said its mishandling of promotions to FanDuel customers in the fourth quarter led to “subdued” underlying market growth during the first half.
“While we firmly believe market growth will ultimately return to higher levels, with more compelling content driving stronger customer engagement, our forecasts prudently assume market growth rates in H2 will be broadly consistent with the mid-single digit growth seen in H1,” outgoing CEO Peter Jackson said in his shareholder letter.
“The US leadership team changes implemented in H1 are designed to ensure we are positioned to deliver improved performance through a more competitive customer-led proposition. Crucially, the encouraging signs we now see in our performance give us the confidence to increase investment in customer acquisition and retention.”
New targets after FanDuel cuts
The lower year-end price targets are the result of FanDuel cutting its guidance to account for the heavier promotions:
- Chad Beynon of Macquarie cut his target to $160 from $190.
- Jordan Bender of Citizens cut his target to $145 from $159.
- Jeffrey Stantial of Stifel cut his target to $133 from $161.
- Barry Jonas of Truist cut his target to $120 from $130.
Those analysts all kept their buy/outperform ratings, however.
Stantial noted that Flutter’s current valuation and its international upside is enough to justify the buy rating. Bender agreed, noting the company’s “unmatched global platform and product portfolio.”
Jonas, meanwhile, said there is potential upside from the higher promotions with expectations lower following the guidance cut.
Financial goals possible in ’29
Beynon started his note talking about Flutter’s investor day in September 2024, which included goals of hitting $21 billion in revenue and $5.25 billion in EBITDA in 2027.
Given the company’s shift into prediction markets since then, Beynon noted it might be pointless to highlight those figures, but he believes the company is still working toward those goals.
“Following the 2Q results and lower 2026 guide, we are reiterating our OP rating, because
we do not believe the story is broken,” Beynon said. “We just believe operational tweaks need to be made. Should FLUT achieve its phase 2 cost saves of $500m by ’29, we believe it can hit its former guide of 25% margin, regaining shareholder trust.”
Not all convinced of approach
Stantial noted the incremental investment feels like back in 2020 through 2022 when most were still awaiting a profit as they continued to invest in players.
Flutter is fair to point out how it used to beat analyst expectations back then, he said, but added the environment is much different now.
“Management noted some greenshoots, and is fair to emphasize FLUT’s track record proving Street wrong on prior growth investments, though US [total addressable market] weakness is difficult to reconcile, competitive environment has evolved, and PM legality remains unresolved – which makes it challenging to have conviction on return on 2H26 [user acquisition] investment,” Stantial said. “… Hence, we think it could be a few quarters before investors re-gain confidence, though more near-term we will monitor state reported handle share closely during the 2026/27 NFL season to assess returns on incremental UA investment.”
Stantial is also waiting to incorporate the $500 million in savings until after the additional color management promised at the third quarter update.
