Exane names Flutter as top pick in gaming sector

Exane BNP Paribas has named Flutter Entertainment as its top pick in the gaming sector ahead of third-quarter earnings season after a recent rough patch for the industry.

Profit warnings in Europe – including UK-listed peers Entain and 888 Holdings – and market share volatility in the US have weighed on share prices over recent months.

As of Friday's closing price, Flutter has fallen 21% over the past six months, while Entain has dropped 34%. 888 Holdings has outperformed, rising 13% since April, but a profit warning in September has seen the stock fallen 23% in the past month.

"We think the negative moves are mostly overdone," Exane said in a research report on Monday.

"The recent warnings from Entain and 888 have raised concerns over further potential regulatory headwinds. We think the worst is probably over, and that Flutter has continued to gain share, especially in online sports betting. Concerns over the potential impact of a single-customer view across operators' brands also look overdone for the more prudent operators."

The bank said that Italy remains an attractive market for the largest omnichannel operators, with Flutter set to benefit.

Exane rates Flutter as 'outperform', along with Entain which it said "offers value after recent share price woes", but remains 'neutral' on 888.