Flutter Entertainment, the parent company of popular gambling brands like Paddy Power and Betfair, has received a boost from Citi as the investment bank raised its share price target for the company. Citi now has a target of £200.00 for Flutter Entertainment's shares, up from the previous target of £180.00. Despite the increase, Citi maintained its Buy rating for the stock [f00c8b07].
The revised share price target comes after Flutter Entertainment reported its full-year 2023 results and transitioned from International Financial Reporting Standards (IFRS) to US Generally Accepted Accounting Principles (GAAP). Citi expects Flutter's US revenues in 2024 to surpass the company's guidance, estimating them to reach $6.3 billion. This is higher than Flutter's projected range of $5.8 billion to $6.2 billion. Citi also forecasts Flutter's US EBITDA in 2024 to be at the higher end of the company's guidance, with a projection of $778 million compared to the guided range of $635 million to $785 million. Citi has extended its forecast horizon to 2028, predicting that Flutter's US revenues will reach $13.2 billion by that year, representing a compound annual growth rate (CAGR) of 25% from 2023 to 2028 [f00c8b07].
The positive outlook for Flutter Entertainment's US growth is expected to provide the company with flexibility for potential mergers and acquisitions or returning cash to shareholders. Flutter Entertainment aims to achieve its target leverage ratio of 2.5 times by the end of the year, further supporting its strategic plans for expansion and value creation [f00c8b07].