Berenberg raises target price on Flutter Entertainment but stays at 'hold'

Berenberg said Flutter's shares had performed "exceptionally" over the past year and currently traded at "a material premium" to peers.

While the German bank acknowledged that some of that premium was justified owing to Flutter's market-leading position in the US, it questioned the potential for further multiple expansion.

"The company has benefited over the disrupted period and we do not think this is accurately reflected in consensus estimates; as a result, we see upside to earnings in the business ex-US," said Berenberg.

However, with Flutter also embarking on "a difficult integration of two global gambling giants", the analysts reckon the risk-reward ratio for the stock is balanced at present.

"Integration remains a key risk to the equity story. Historically, deals in this industry have faced issues, not just related to the delivery of synergies, but from a lack of available resource to concentrate on areas such as product development," said Berenberg.

"While the company will have no doubt learned lessons from the Paddy Power Betfair deal, historical evidence shows that successfully completing the integration while ensuring all other areas of the business continue to run smoothly is challenging, and we remain cautious about this."