Proactive Investors - Betting companies like Flutter Entertainment PLC (LON:FLTRF), Entain (LON:ENT) and 888 are set to benefit from growth in both their US and online markets, outweighing any regulatory headwinds, analysts believe.
Stateside bank Jefferies stamped a ‘buy’ rating on both stocks, although Paddy Power owner Flutter received the ‘top pick’ status due to its “outsized benefits” regarding its ability to gain online market leadership.
In the US, the gambling industry has been growing rapidly since bans on the practice were lifted in multiple States, and Flutter, which owns US market leader FanDuel, is expected to benefit from a rise in profitability across the sector in 2024.
Jefferies said: “The US is the key investor focus, with online gambling market share, the performance of new entrants and the quantum/timing of future profitability the dominant discussion topics.”
However, it’s not just “Flutter’s continued market dominance despite an increasingly competitive backdrop” which is catching the eyes of the US bank.
Following the group switching its primary listing to the US, Jefferies believes there is a disconnect in valuation between it and “US-listed, high growth, digital peers” who operate on “materially higher multiples”.
It leaves Jefferies viewing an 18% upside for the stock, giving it a 19,500p share price target.
While analysts aren’t as bullish on London-listed rivals Entain PLC and 888 Holdings PLC (LON:888), Jefferies still rates both a ‘buy’ and targets an upside of 31% and 86% respectively.
Jefferies also believes upcoming legislation in the US, regarding iGaming and sports betting, as well as new regulation in the UK, could be a catalyst for the groups.