Citi Downgrades Flutter Entertainment to Sell Amid Earnings Risks
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 1 hour ago
0mins
Should l Buy FLUT?
Source: seekingalpha
- Rating Downgrade: Citi Research has downgraded Flutter Entertainment (FLUT) from Buy to Sell and placed it on a 30-day Catalyst Watch due to concerns over downside risks to earnings in the first half of the year and potential adjustments to adjusted EBITDA guidance.
- Earnings Forecast Cuts: Analyst Monique Pollard has reduced her adjusted EBITDA forecasts for Flutter by 10% for Q1 and 37% for Q2, indicating uncertainty in the company's earnings momentum in the U.S. market, particularly regarding its investments in prediction markets.
- Buyback Forecast Adjustments: Pollard also lowered buyback forecasts for FY26 and FY27, cutting them from $600 million to $250 million and from $1.5 billion to $750 million, respectively, to ensure that leverage remains within management's medium-term guidance range of 2-2.5x.
- Market Reaction Expectations: Flutter (FLUT) shares are expected to open more than 2% lower on Thursday, reflecting heightened market concerns about the company's future profitability, which may impact investor confidence and stock performance.
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Analyst Views on FLUT
Wall Street analysts forecast FLUT stock price to rise
26 Analyst Rating
23 Buy
3 Hold
0 Sell
Strong Buy
Current: 111.790
Low
228.00
Averages
296.77
High
381.46
Current: 111.790
Low
228.00
Averages
296.77
High
381.46
About FLUT
Flutter Entertainment plc is an online sports betting and iGaming operator. Its segments include the United States (U.S.), United Kingdom and Ireland (UKI), Australia and International. The U.S. segment offers sports betting, casino, DFS and horse racing wagering products to players across various states in the United States, mainly online but with sports betting services also provided through retail outlets and certain online products in the province of Ontario in Canada. The UKI segment offers sports betting (sportsbook), iGaming products and other products through its Sky Betting & Gaming, Paddy Power, Betfair and tombola brands. Its Australia segment offers online sports betting products through its Sportsbet brand. The International segment includes its operations in 100 global markets and offers sports betting, casino, poker, rummy and lottery, mainly online. This segment includes Sisal, PokerStars, Snai, Betfair International, Adjarabet, MaxBet, Betnacional, and other brands.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
Citi Downgrades Flutter Entertainment to Sell Amid Earnings Risks
- Rating Downgrade: Citi Research has downgraded Flutter Entertainment (FLUT) from Buy to Sell and placed it on a 30-day Catalyst Watch due to concerns over downside risks to earnings in the first half of the year and potential adjustments to adjusted EBITDA guidance.
- Earnings Forecast Cuts: Analyst Monique Pollard has reduced her adjusted EBITDA forecasts for Flutter by 10% for Q1 and 37% for Q2, indicating uncertainty in the company's earnings momentum in the U.S. market, particularly regarding its investments in prediction markets.
- Buyback Forecast Adjustments: Pollard also lowered buyback forecasts for FY26 and FY27, cutting them from $600 million to $250 million and from $1.5 billion to $750 million, respectively, to ensure that leverage remains within management's medium-term guidance range of 2-2.5x.
- Market Reaction Expectations: Flutter (FLUT) shares are expected to open more than 2% lower on Thursday, reflecting heightened market concerns about the company's future profitability, which may impact investor confidence and stock performance.
See More
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- TSMC Profit Surge: TSMC reported a 58% year-over-year profit increase, despite facing challenges with shortages of industrial gases; management noted a 'little bit softer' memory pricing, indicating ongoing demand and competitive pressures in advanced chip manufacturing that could impact future profitability.
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Citi Downgrades Flutter Entertainment to Sell Amid Regulatory Uncertainty
- Significant Downgrade: Citi's research arm has downgraded Flutter Entertainment from buy to sell, reflecting diminished confidence in U.S. growth forecasts for 2026 and 2027, with analyst Monique Pollard noting that future U.S. market value is no longer prioritized.
- Stock Price Plunge: U.S.-listed shares of Flutter have dropped 48% since the beginning of the year, correlating with the company's forecast of slower growth in its U.S. business, indicating signs of weakening customer engagement, particularly following a less exciting NFL season.
- Investment Risk in Prediction Markets: FanDuel plans to allocate up to $300 million for building its new prediction market in the near term, but investor concerns arise due to regulatory uncertainties in the U.S. for this emerging industry, with Citi suggesting that this move may not yield the anticipated business growth.
- Uncertain Market Outlook: Although prediction markets are rapidly growing in the U.S., projected to reach $1 trillion by 2030, Citi warns that it remains unclear whether FanDuel's prediction market will secure the necessary regulatory approvals, emphasizing that investors will require proof of execution and legal clarity before assigning material value to this segment.
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- Market Reaction: This decline may be linked to investors reassessing the company's financial health, particularly after a previous day's surge, with changing market sentiment reflecting doubts about its profitability.
- Investor Confidence: The sharp drop in stock price has shaken investor confidence in Allbirds, potentially leading to further sell-off actions that could exacerbate stock volatility and impact the company's market image.
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- Intensifying Market Competition: Analyst John DeCree warned that media investments from prediction market players will be focused around key events like the World Cup and NFL season, suggesting that the competitive environment could worsen in the short term, impacting the overall market landscape.
- DraftKings' Market Positioning: DraftKings has launched a standalone app and web product called DraftKings Predictions in 38 states, allowing eligible users to trade on real-world outcomes in sports and finance, showcasing its proactive approach in the prediction market space.
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Citi Downgrades Flutter Entertainment to Sell Amid Earnings Risks
- Rating Downgrade: Citi Research has downgraded Flutter Entertainment (FLUT) from Buy to Sell and placed it on a 30-day Catalyst Watch due to concerns over downside risks to earnings in the first half of the year and potential adjustments to adjusted EBITDA guidance.
- Earnings Forecast Cuts: Analyst Monique Pollard has reduced her adjusted EBITDA forecasts for Flutter by 10% for Q1 and 37% for Q2, indicating uncertainty in the company's earnings momentum in the U.S. market, particularly regarding its investments in prediction markets.
- Buyback Forecast Adjustments: Pollard also lowered buyback forecasts for FY26 and FY27, cutting them from $600 million to $250 million and from $1.5 billion to $750 million, respectively, to ensure that leverage remains within management's medium-term guidance range of 2-2.5x.
- Market Reaction Expectations: Flutter (FLUT) shares are expected to open more than 2% lower on Thursday, reflecting heightened market concerns about the company's future profitability, which may impact investor confidence and stock performance.
See More
U.S. Stocks Edge Up as PepsiCo and TSMC Shine
- PepsiCo's Quarter Performance: PepsiCo achieved its first volume growth in North American food business in two years, with CEO Ramon Laguarta addressing the industry's threat from GLP-1 weight-loss drugs, leading to a 1% rise in shares, demonstrating the company's resilience and adaptability in a competitive consumer goods market.
- TSMC Profit Surge: TSMC reported a 58% year-over-year profit increase, despite facing challenges with shortages of industrial gases; management noted a 'little bit softer' memory pricing, indicating ongoing demand and competitive pressures in advanced chip manufacturing that could impact future profitability.
- J.B. Hunt Transport Services: J.B. Hunt indicated the start of a new cycle with positive demand signals, reporting a first-quarter earnings beat and a 1% premarket share increase, reflecting potential growth opportunities in the transportation sector.
- Analyst Rating Changes: JPMorgan downgraded Corning to hold and cut its price target from $175 to $115, citing the need for greater earnings visibility to support stock upside, indicating a cautious market outlook on the company's future performance.
See More
Latest Rating Changes on Wall Street
- ResMed Upgrade: JPMorgan upgrades ResMed to overweight, highlighting its position as a global leader in the obstructive sleep apnea market, primarily generating revenue from CPAP devices and masks, along with a portfolio of respiratory health solutions, indicating strong market competitiveness.
- Nvidia Reiteration: Evercore ISI reiterates Nvidia as outperform, noting that despite recent underperformance, its potential in AI demand and compute cycles remains robust, underscoring its significance and investment value in future markets.
- Okta Upgrade: Raymond James upgrades Okta to outperform, suggesting that the shift of AI into enterprise applications will significantly enhance Okta's market opportunities, particularly in identity security, indicating potential market expansion.
- PayPal Downgrade: Mizuho downgrades PayPal to neutral, citing competitive and fundamental pressures, reflecting market concerns about its future growth, which may impact investor confidence.
See More
Citi Downgrades Flutter Entertainment to Sell Amid Regulatory Uncertainty
- Significant Downgrade: Citi's research arm has downgraded Flutter Entertainment from buy to sell, reflecting diminished confidence in U.S. growth forecasts for 2026 and 2027, with analyst Monique Pollard noting that future U.S. market value is no longer prioritized.
- Stock Price Plunge: U.S.-listed shares of Flutter have dropped 48% since the beginning of the year, correlating with the company's forecast of slower growth in its U.S. business, indicating signs of weakening customer engagement, particularly following a less exciting NFL season.
- Investment Risk in Prediction Markets: FanDuel plans to allocate up to $300 million for building its new prediction market in the near term, but investor concerns arise due to regulatory uncertainties in the U.S. for this emerging industry, with Citi suggesting that this move may not yield the anticipated business growth.
- Uncertain Market Outlook: Although prediction markets are rapidly growing in the U.S., projected to reach $1 trillion by 2030, Citi warns that it remains unclear whether FanDuel's prediction market will secure the necessary regulatory approvals, emphasizing that investors will require proof of execution and legal clarity before assigning material value to this segment.
See More
Allbirds Shares Plunge 24% in Premarket Trading
- Stock Volatility: Allbirds (BIRD) shares fell 24% in Thursday's premarket trading, significantly reversing Wednesday's rally and indicating market concerns about the company's future performance.
- Market Reaction: This decline may be linked to investors reassessing the company's financial health, particularly after a previous day's surge, with changing market sentiment reflecting doubts about its profitability.
- Investor Confidence: The sharp drop in stock price has shaken investor confidence in Allbirds, potentially leading to further sell-off actions that could exacerbate stock volatility and impact the company's market image.
- Strategic Implications: Allbirds must implement effective measures to restore investor confidence, such as improving financial transparency or adjusting business strategies, to navigate market uncertainties and stabilize its stock price.
See More
Impact of Prediction Markets on Sports Betting
- Rising Customer Acquisition Costs: BetMGM's management highlighted that prediction market platforms are heavily investing in sports media, leading online sports betting operators to bid up for customer acquisitions, which is expected to extend payback periods and reflect in DraftKings and FanDuel's upcoming Q1 earnings guidance.
- Intensifying Market Competition: Analyst John DeCree warned that media investments from prediction market players will be focused around key events like the World Cup and NFL season, suggesting that the competitive environment could worsen in the short term, impacting the overall market landscape.
- DraftKings' Market Positioning: DraftKings has launched a standalone app and web product called DraftKings Predictions in 38 states, allowing eligible users to trade on real-world outcomes in sports and finance, showcasing its proactive approach in the prediction market space.
- FanDuel's Nationwide Coverage: FanDuel offers its FanDuel Predicts app across all 50 states, enabling users to trade on outcomes in sports, economics, financial markets, and crypto, further solidifying its market position.
See More
