Deutsche Bank upgrades Flutter after 'material' underperformance

The bank noted that Flutter shares are down 11% year-to-date against a sector that is up 33%.

"We see a solid H1 performance, with sports showing a strong recovery, and continued momentum in the US and Australia, but a marked decline in iGaming (driven by Poker, which had a significant spike up in Q2 FY20) reflecting particularly tough comps," it said.

DB said Flutter has been hit by a number of factors this year. "There was the surprise departure of FanDuel’s CEO. This followed shortly after the announcement that Fox had filed an arbitration claim against Flutter over the price at which it can exercise options to acquire 18.6% of FanDuel. And then there was the appeal court in Kentucky, which decided that Flutter owes $870m plus accrued interest (potentially $1.2bn).

"The big hit, though, was from Fox, which argues that it should pay the price which Flutter paid Fastball for its 37% stake in FanDuel last December."

The bank cuts its price target on the stock 16,257p from 16,285p, to reflect risks regarding Fox's FanDuel option and the Kentucky fine.

In the same research note on the online gaming sector, Deutsche upped its price target on buy-rated Entain to 2,108p from 2,090p and on hold-rated Playtech to 446p from 441p.