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HSBC sees upside potential for Flutter Entertainment plc (OTCPK:PDYPY) and the stock is currently pricing in a worst-case scenario. Analyst Joseph Thomas noted weak performance in Australia, adverse sports results and foreign exchange trimmed third-quarter earnings results, while headwinds from regulatory and tax considerations They have also hurt confidence in betting stocks.
Thomas believes Flutter (OTCPK:PDYPY) stock looks attractive based on estimates of 16x EV/EBIT by 2025 and highlighted the 7% free cash flow yield. “This does not seem expensive to us for a group that can continue generating good growth, since it absorbs some of the specific issues,” warned Thomas.
Looking ahead, HSBC believes that most of Flutter’s (OTCPK:PDYPY) enterprise value is now tied up in the US business, with a US IPO planned for the first quarter of 2024. Most importantly, FanDuel’s performance is on track, with management recently targeting the midpoint of its range. With concerns over FanDuel’s market share and outlook seemingly lingering, the firm believes that FanDuel meeting forecasts should be a positive catalyst for Flutter (OTCPK:PDYPY).
HSBC has a Buy rating on Flutter Entertainment (OTCPK:PDYPY) and a price target of 16,220 pence to represent a 25% upside.
Seeking Alpha analyst Howard Jay Klein also believes that the recent drop in Flutter’s (OTCPK:PDYPY) share price is a buying opportunity.
