Will Flutter Entertainment stock price soar after third quarter results?

Flutter Entertainment’s stock price has performed strongly since the release of half-year results in mid-August. In the results, the owner of major gaming brands such as Betfair and Paddy Power said sales in the United States increased by 50% even as losses in the country increased. Shareholders will be looking for signs of continued third-quarter earnings growth ahead.

Flutter Entertainment [FLTR.L] The share price has posted a stunning performance since the start of August, outperforming both rival bookmakers and the FTSE 100. A major catalyst was its well-received half-year results released that month. Despite results showing mounting losses, Flutter’s management presented a positive outlook for the full year with strong revenue growth in the United States.

The upcoming third-quarter results, due Nov. 9, could continue Flutter’s stock price momentum, although a rise in the cost of living could impact revenue.

What‘it’s happening with Flutter Entertainment‘the share price?

Since August 1, Flutter Entertainment stock price has gained 38.25%, closing Friday November 4 at 11,510p. Flutter Entertainment’s stock price enjoyed a 16% rebound following the release of half-year results on August 12 and managed to carry that momentum through Friday’s close.

Overall, the stock has fallen 2.13% this year, beating rival bookmakers Entain [ENT.L] and 888 [888.L]which experienced respective declines of 23.71% and 67.49%.

US performance to watch in third-quarter results

Flutter’s US operations will be closely watched in this week’s third quarter results. In the United States, online sports betting is growing as more states legalize gambling in an effort to generate tax revenue.

In the second quarter of 2022, sports betting revenue in the country reached $1.42 billion, up 58.7% from the same period a year earlier, according to the Commercial Gaming Revenue Tracker report. American Gaming Association. By 2025, Morgan Stanley expects the US sports betting market to reach $12.8 billion.

Flutter is perhaps best known as the owner of major gaming brands, including Betfair and Paddy Power in the UK and Ireland, but in the US it has 51% of the sports betting market under its FanDual brand.

In the first six months of the year, Flutter’s US revenue grew 50% year-over-year to £1.05 billion. During this period, EBITDA losses in the US increased by 53% year-on-year to £132 million. Sales and marketing costs in the country rose 29% year-on-year to £399m, while operating costs rose 46% year-on-year to £240m.

Flutter forecasts US revenue of between £2.3-2.5bn for the full year, with an EBITDA loss of between £225-275m, assuming online bookmaker FanDuel launches in Kansas in the fourth quarter of 2022. Flutter said it expects its U.S. business to transition to positive full-year EBITDA in 2023 — something to watch in this week’s results. .

Group-wide, Flutter’s post-tax losses widened to £112m in the six months to June 30, from a loss of £86m in the same period last year. former. Underlying profit fell 23% year-on-year to £434m, despite an 11% rise in group revenue to £3.39bn. Flutter guided full-year underlying earnings of between £1.29 billion and £1.39 billion.

Are analysts betting on Flutter?

Despite the surge in the stock price, Flutter is not immune to the broader pressures facing the economy. Deutsche Bank analysts lowered their price target on Flutter and fellow bookmaker 888 in an Oct. 3 research note, fearing a longer-than-expected period of higher interest rates could dampen the market European leisure.

Deutsche Bank analysts cut their target on Flutter to 13,500p from 13,820p, and cut their target on 888 from 296p to 230p. Analysts reiterated buy ratings for both stocks. The revised price targets were based on the higher cost of debt and valuation, rather than a drop in customers’ disposable income. Flutter said it had a debt of £3.8 billion at the end of June 30.

Analysts said “rising interest rates will put additional pressure on discretionary spending,” which they will consider in future research notes. It will be interesting to see if Flutter provides any insight into whether the cost-of-living squeeze trickled down to lower customer spending in its third quarter.

Of the 20 analysts interviewed by the FinancialTimesFlutter has a median price target of 13,500p, suggesting a 17.3% upside on Friday‘is near. Of the 26 offer ratings, a majority of 15 have an “outperform” rating on the stock.