Flutter quotes strong Q2 and bullish outlook by Investing.com

Investing.com — Shares of Flutter Plc (LON:) (NYSE:) rose on Wednesday after the company reported a strong second-quarter performance that beat market expectations.

At 5:25 am (0925 GMT), Flutter was trading 8.1% higher at £15,835.

“A consistent story of growth and market share gains is not reflected in Flutter’s current valuation,” analysts at Jefferies said in a note.

The company’s group compound EBITDA growth rate is projected at around 20% to 2030, with a forward EV/EBITDA multiple of 12.3x for FY25E and a free cash flow yield of 4.5%.

The US market remains a key driver for Flutter, with positive cohort growth, higher retention rates and market share gains. The company raised its US EBITDA guidance by $30 million, offsetting a $50 million impact from the new Illinois tax.

In addition, Flutter’s online growth in the States before 2022 reached 33%, with strong performances in both sports betting and iGaming.

Outside the US, Flutter also showed robust growth, with particular strength in the UK and Ireland, Italy, Georgia, Spain and Brazil. While Australia has faced challenges in racing, the sports betting segment has shown promising signs.

Flutter’s decision to moderate the bounty and local marketing to mitigate increased taxes in the US, rather than introduce a surcharge, was well received by investors. The company expects to offset 50% of the tax charge in FY25E.

Jefferies flagged Flutter’s strong financial position with a net debt/EBITDA ratio of 2.6x, approaching its target range of 2.0-2.5x. The brokerage expects share buybacks from FY26E due to substantial excess cash flow.