JP Morgan Cuts Flutter Target to $110, Keeps Neutral Rating
GuruFocus says the stock trades 74% below its $304.90 fair value after JPMorgan cut the target to $110 on Oct. 25. Alpha Score 28, Neutral rating.
JP Morgan maintained its Neutral rating on Flutter Entertainment (FLUT) on Oct. 25 and cut its price target to $110 from $114. The 3.5% reduction continues a series of downward revisions from other analysts. Citizens, Wedbush, Susquehanna and Macquarie have also trimmed their Flutter targets, according to the GuruFocus report.
GuruFocus said the sequence of downward revisions points to a more conservative approach to Flutter's valuation.
Flutter was formed in 2016 through the merger of Paddy Power and Betfair. It runs FanDuel in the U.S. and betting and gaming brands in other markets. Flutter is based in New York and has a market value of about $13.57 billion. The Travel & Leisure industry Flutter sits in has grown quickly. The sector also faces regulatory scrutiny and competitive pressure, the report said.
The $110 target sits far below the fair value that GuruFocus publishes. The GF Value model puts Flutter at $304.90, a level that leaves the shares about 74% below. The bank's target is about 36% of that figure.
The two numbers answer different questions. The price target reflects the bank's view of where the stock will trade. The GF Value is GuruFocus's estimate of intrinsic value.
Profitability is the main issue separating the two. Flutter's trailing price-to-earnings ratio is not applicable because the company has negative earnings. The forward P/E stands at 11.04, compared with a five-year median of 144.47. GuruFocus said the discrepancy shows the difficulty Flutter faces in reaching profitability, which makes earnings-based valuations less reliable.
GuruFocus's GF Score, which combines financial strength, profitability, growth, valuation and momentum, gives Flutter 69 out of 100. Growth scores 9 out of 10, the strongest sub-rank, indicating strong potential for future revenue increases. Valuation and momentum each score 2 out of 10.
AlphaScala assigns Flutter an Alpha Score of 28 out of 100, labeled Weak, with the full breakdown on the FLUT stock page.
Insider selling has run ahead of buying. GuruFocus data show $644,214 in shares sold over the past three months, a total that is a fraction of a percent of Flutter's market value. Five gurus hold Flutter shares, according to the site; two added positions and seven trimmed holdings in recent quarters. The selling may point to caution about near-term prospects, the report said.
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