Stock broker Davy pulled back its earnings forecast for 2020 and 2021 for Flutter Entertainment, citing concerns around increased costs in the company’s online business.
Efforts by the Paddy Power and Betfair owner to create a more profitable and sustainable online business "are proving costlier than previously anticipated", analysts Michael Mitchell and Jack O'Halloran wrote in a research note.
As a result the analysts said they expect earnings, excluding the company’s US operation, to be down by 5 per cent compared to prior estimates.
“Flutter remains uniquely positioned in the fast-emerging US market. Furthermore, its Australian performance, coupled with scope for improvement in online, means its core business [the group excluding US] remains attractively valued,” the analysts said, reiterating their “outperform” rating on the stock.
Flutter has had a "better than expected" start since it launched in New Jersey, the Davy analysts added, and is expected to launch in Indiana this year.
Outside of New Jersey, nine states in the US have passed online betting laws including Pennsylvania and West Virginia, which now have live betting markets.
