DAVY VIEW

Flutter has reported a strong H123, beating our expectations, with the US outperforming again and achieving good profitability in H1 – the first operator to achieve this feat for a half year’s trading. In a sector where scale is key, the US business generated almost 35% more revenue than the no.2 operator and more than double the no.3. The UK&I and International divisions are performing very well and despite flagging greater levels of post–Covid reversion in Australia, FY guidance (at the mid-point) is in line with our expectations. We continue to believe that the group is in the early stages of a US driven upgrade cycle and growth prospects remain attractive in its ex-US business. Furthermore, it is a globally diversified, high margin and cash generative business. Trading on 11.4x 2025 EV/EBITDA, we believe valuation is attractive and retain our ‘Outperform’ rating.