Flutter Entertainment Tops Jefferies’ UK Picks in European Gaming Sector

This endorsement also extends to other London-listed counterparts such as 888 Holdings, Entain, and Playtech, all of which have been classified as ‘buys’. The brokerage delineates four pivotal reasons underpinning its optimistic stance on the European gaming landscape: the growth and increased penetration of online channels as a hedge against macroeconomic fluctuations, an anticipated mitigation in regulatory challenges, the onset of profitability escalations in the US market, and the ongoing dynamism in mergers and acquisitions, particularly emphasizing the valuation disparities in the European public markets.

Flutter’s Strategic Advantages

Flutter Entertainment, in particular, is highlighted for its strategic pivot towards a primary listing in the US, a move Jefferies perceives as a catalyst for short-term momentum.

This shift is seen as a reinforcement of Flutter’s enduring market leadership amidst a competitive arena. The brokerage has set a target price of 19,500p for Flutter’s UK-listed shares, suggesting an 18% potential uplift from the current levels.

A critical analysis juxtaposing Flutter with its US-listed contemporaries reveals a significant valuation gap. Despite Flutter’s 16.6x EV/EBITDA against an 18% EBITDA compound growth rate, it stands in contrast to its peers who enjoy considerably higher multiples.

The Broader Perspective

Jefferies’ report underscores a broader optimism for the European gaming sector, fueled by the resilience offered by online gaming against economic headwinds and a conducive regulatory environment.

The US market, in particular, is poised for profitability leaps, further buoyed by the sector’s vibrant M&A landscape, which underscores the current undervaluation in European public markets.

Our Comment on the Article

The endorsement of Flutter Entertainment and its peers by Jefferies marks a significant moment for the European gaming sector, highlighting the industry’s robustness and growth potential.

The strategic maneuvers by companies like Flutter, combined with favorable industry dynamics, present a compelling narrative for investors and stakeholders. As the sector continues to evolve, the insights provided by Jefferies offer valuable perspectives on the opportunities and challenges that lie ahead.