Wells Fargo has upgraded its rating for Flutter Entertainment (FLUT, Financial), a major player in the gaming industry, from "Hold" to "Overweight." This revision led to a nearly 5% increase in Flutter's stock during pre-market trading. Analyst Daniel Politzer and his team believe that Flutter's current stock price reflects a near worst-case scenario concerning UK tax issues. They emphasize the company's conservative financial targets in the US for fiscal year 2027, highlighting the potential for significant growth in key performance indicators tied to structural holdings and market expansion.
The analysts also noted Flutter's product innovation and evolving regulatory landscape in promising states like Florida, Texas, and California. Wells Fargo argues that Flutter’s global presence enables it to leverage superior technology and innovative products. The bank also finds Flutter's valuation attractive, given the company's strong capital returns and a 25% compound annual growth rate over three years.
Last week, Flutter's stock experienced an 8.78% drop due to news about potential tax hikes in the UK. Reports suggested that the UK Treasury is considering a £3 billion "windfall tax" on the gaming industry. The proposals being evaluated could potentially double certain taxes on online betting and gaming companies to address a £22 billion public finance gap.
