FanDuel Hailed as Catalyst for Flutter Stock

Posted on: March 14, 2024, 03:18h. 

Last updated on: March 15, 2024, 11:36h.

Todd Shriber @etfgodfather Read More
Expertise: Financial, Gaming Business, Mergers and Acquisitions.

FanDuel is viewed as a primary catalyst for Flutter Entertainment (NYSE: FLUT) stock, which recently debuted on the New York Stock Exchange (NYSE).

Flutter FOX Bet
The Flutter logo, as seen in an investor deck. An analyst sees FanDuel as an important catalyst for the stock. (Image: Flutter Entertainment)

That’s the opinion of JPMorgan analyst Estelle Weingrod, who in a new report to clients, upgraded shares of the Dublin-based gaming company to “overweight,” with a price target of $272. That implies upside of about 22.5% from current levels.

Weingrod noted FanDuel accounts for 40% of Flutter’s revenue and is 80% of the reason for the upgrade of the parent company’s shares.

(FanDuel is) demonstrating leaps of progress and the resilience of the business model … which should drive further upside potential for the shares,” wrote the analyst. “(We’re now) now feel increasingly confident about the TAM opportunity crystallizing.

She added that FanDuel can gain more market share in the U.S., and that the operator’s opportunity set in iGaming isn’t fully appreciated by investors. Flutter shares debuted on the NYSE on January 29. To date, it’s been a smart move by the company, as highlighted by a gain of 9.15% over the past month.

Flutter Stock Has Wide Moat Credentials

Weingold also observed that Flutter comes with a “strong moat,” which can guard against competitive threats.

“This continues to reinforce its positioning despite increased competitive intensity (especially in the U.S.) and ongoing regulatory headwinds,” she wrote.

In the U.S., FanDuel and rival DraftKings (NASDAQ: DKNG) essentially function as a duopoly in the online sports betting market – one in which competitors have proven ineffective in grabbing significant share from the two leaders. In the UK, Flutter is expanding its lead over Ladbrokes operators Entain Plc (OTC: GMVHF). Over the past year, Flutter stock has rallied, while shares of Entain tumbled.

Weingold added that the Flutter stock story is underpinned by solid fundamentals, including brand recognition, geographic reach, and scale. Those factors put the operator in a “favorable spot to capture growth opportunities across markets, while keeping it well-positioned to efficiently tackle regulatory headwinds,” according to the analyst.

Speaking of Branding…

The assertion that Flutter enjoys enviable brand recognition is accurate, particularly when accounting for the fact that FanDuel is one of the most valuable gaming brands in the world. That’s one of the reasons the company can cement and expand its market share position in the U.S.

FanDuel’s superior product/tech stack continues to drive enhanced hold rates through leading adoption of high-margin products (parlays, live [wagering]) and improve generosity effectiveness, leading to improved engagement and monetization of its customer base,” concluded Weingold.

Earlier this week, it was announced that FanDuel will become the lone operator of mobile sports wagering in Washington, D.C. That transition is expected to take place in the spring. Flutter owns 95% of FanDuel, with the other 5% controlled by Boyd Gaming (NYSE: BYD).