DAVY VIEW

Flutter Entertainment’s (Flutter) H1 results are in line with expectations (+2% versus Davy; 0.5% versus consensus). Further, the group’s first-half performance provides evidence of its valuable position in the attractive US and Australia markets and the structural progress being made across key Online initiatives (shift towards recreational customers driving margin improvement and International Betfair revenues now improving). However, there is also a reminder that market challenges present a persistent risk to this progress (unexpected Q2 market ‘switch offs’ for Exchange and responsible gaming (RG) measures in core markets). Despite these, we believe management can make further progress over the course of the next 12 months. Also, with the core group trading on just 11.2x 2020 P/E and close to a double-digit FCF yield on our estimates, these challenges are reflected in the stock. We reiterate our ‘Outperform’ rating.