Berenberg lowers target price on Flutter

Berenberg said Flutter was a 'top pick' in the leisure space, noting that since it upgraded the stock to 'buy' from 'hold' in November, shares had fallen by close to 30%.

While the German bank said there were reasons for this – earnings downgrades in the UK & Ireland and international divisions, falling US sports-betting and online gaming valuations, and some heightened regulatory risks – it feels the stock's current valuation was "not reflective of the quality of the business".

Berenberg said Flutter's full-year results were in line with expectations, with its Australia and US divisions offsetting an "underwhelming" performance in the UK.

"The introduction of safer-gambling policies, tied in with a string of customer-friendly results, explains some of this performance, but compared to peers it does seem Flutter underperformed in Q4," said the analysts. "We adjust our numbers for these results, as well as factoring in the disruption in Russia/Ukraine, which together contributed £60.0m in FY21."

However, Berenberg stated that while the downgrades as a result of Russia/Ukraine and the UK & Ireland division were "a negative", it insisted that the subsequent share price reaction since the results was "overdone" and reiterated its 'buy' rating on the stock.