FanDuel is currently riding the high wave as a pivotal force behind the success of Flutter Entertainment (NYSE: FLUT) stock, following its much-anticipated debut on the New York Stock Exchange (NYSE). This strategic movement has sparked considerable interest among investors and market analysts alike.
In a recent enlightening report to clients, JPMorgan analyst Estelle Weingrod upgraded shares of the Dublin-based gaming giant to “overweight” and set a price target of $272. This adjustment suggests a potential upside of about 22.5% from its present standings.
Weingrod attributes a whopping 40% of Flutter’s revenue to FanDuel and believes it's responsible for 80% of the rationale behind the upgrade of the parent company’s shares. “FanDuel is demonstrating leaps of progress and the resilience of the business model…which should drive further upside potential for the shares,” Weingrod notes, expressing growing confidence in the Total Addressable Market (TAM) opportunity for Flutter.
The analyst further underscores FanDuel's potential to seize more market share in the US. Additionally, she points out that FanDuel's iGaming venture is yet to be fully recognized by investors for its potential. Since its NYSE debut on January 29, Flutter has seen a commendable 9.15% gain over the past month, signaling a strategic win for the company.
Weingrod elaborates on Flutter's “strong moat,” a defensive mechanism safeguarding it against competitive threats. This strength is crucial in maintaining its market position amidst heightened competition, especially in the US, and regulatory challenges.
In the competitive landscape of online sports betting in the US, FanDuel, alongside DraftKings (NASDAQ: DKNG), essentially enjoys a duopoly. This dominance is evident as competitors struggle to snatch a significant market share from these two leaders. In the UK, Flutter is further expanding its lead over rivals such as Entain Plc (OTC: GMVHF), contrasting Flutter's stock rally against Entain's downturn.
Weingrod commends Flutter's underlying fundamentals, including brand recognition, geographic reach, and scale. These elements place Flutter in a "favorable spot to capture growth opportunities across markets while efficiently tackling regulatory headwinds," she asserts.
Flutter's enviable brand recognition is not without merit, significantly attributed to FanDuel's stature as one of the world's most valuable gaming brands. This recognition facilitates the company's ongoing efforts to consolidate and enhance its market share position in the US.
Weingold concludes, “FanDuel’s superior product/tech stack continues to drive enhanced hold rates through leading adoption of high-margin products (parlays, live [wagering]) and improve generosity effectiveness, leading to improved engagement and monetization of its customer base.”
In a recent development, it was announced that FanDuel will become the exclusive operator of mobile sports wagering in Washington, DC, with the transition expected in the spring. Flutter owns a commanding 95% of FanDuel, with the remaining 5% controlled by Boyd Gaming (NYSE: BYD).
Flutter Entertainment and FanDuel are setting new benchmarks in the gaming industry, with strategic maneuvers and market expansions positioning them as leaders in the competitive landscape. The synergy between these entities not only underscores their market dominance but also highlights the untapped potential within iGaming and sports betting sectors, promising exciting developments for investors and gaming enthusiasts alike.
