DAVY VIEW

Confirmation that Flutter expects its US business to turn profitable in 2023 highlights that a step-change in the group’s profit and cashflow generation potential is now approaching. We believe group EBITDA can double over the coming years (from <£1.1bn in FY21 to >£2bn by FY24). With profitability and cashflow set to track the group’s strong revenue momentum more closely, group valuation is also normalising. It unveils a unique investment opportunity – structural growth at a compelling valuation (group EV/EBITDA to halve to c.12x over the same period). Following strong progress in H1, we increase current year ex-US EBITDA estimates by c.9%. We also increase our 12-month price target to £245/share and reiterate our ‘Outperform’ recommendation.