Flutter Named Stifel's Top Gaming Pick Amid Sector-Wide Earnings Concerns

Stifel has identified Flutter Entertainment as its top pick in the online gambling sector heading into third-quarter earnings, citing an attractive valuation even as the firm warns of broad headwinds for the industry. In an October 25 research note, the brokerage cautioned that operators face a potentially disappointing earnings season due to unfavorable sports results, slowing online casino growth, and investment pressures related to prediction markets.

Flutter Favored on Valuation

Stifel maintained its "buy" rating on Flutter Entertainment but lowered its price target to $125 from $133, anticipating a 7% miss on third-quarter adjusted EBITDA estimates. The revision reflects the impact of unfavorable sports outcomes and the company's recent exit from the Brazilian market.

Despite the short-term challenges, the firm highlighted positive U.S. trends for Flutter's FanDuel brand, whose sports betting handle is reportedly tracking 10% higher year-over-year, outpacing analyst expectations of 5% growth. Stifel noted that a widening valuation discount to rival DraftKings, which has grown to approximately 40% based on projected 2027 EBITDA, makes Flutter its preferred stock.

Ad

Price Targets Trimmed Across the Board

Stifel adjusted its outlook for several other companies in the gaming ecosystem, generally reflecting a more cautious stance on near-term profitability.

• DraftKings (DKNG): The firm kept its "buy" rating but cut its price target to $32 from $36. While expecting a strong net gaming revenue hold rate, Stifel noted that increased spending on customer acquisition for its prediction-market product could weigh on reported earnings.
• Rush Street Interactive (RSI): Stifel maintained a "buy" rating while lowering its target to $30 from $34, forecasting a slowdown in North American revenue growth. However, it views the stock's valuation as attractive, supported by growth prospects in Latin America.
• Sportradar Group (SRAD): The price target was reduced to $17 from $18, with the "buy" rating intact. The revision accounts for adverse European soccer results and Brazil's betting shutdown, though potential data deals offer longer-term support.
• Genius Sports (GNS): Stifel reiterated its "hold" rating and cut its target to $7 from $8.50, citing legal uncertainty and a possible U.S. Supreme Court review as a key overhang that may limit investor enthusiasm.