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Broker tips: Flutter Entertainment, Rolls-Royce

By Iain Gilbert

Date: Tuesday 14 Mar 2023

Broker tips: Flutter Entertainment, Rolls-Royce

(Sharecast News) - Analysts at Berenberg raised their target price on gaming outfit Flutter Entertainment from 13,800.0p to 16,000.0p on Tuesday as the group's US outperformance continues at pace.
Berenberg believes that Flutter Entertainment continues to be a "best-in-class operator", with a US business that remains "clearly" at the top of the market.

While it views Flutter's recent full-year results as a "mixed bag", with weakness in Australia offset by a stronger performance in other regions, Berenberg stated that considering that the firm's US performance has "remained standout", with improving unit economics and continued market penetration, it thinks that the company remains on track to deliver an underlying profit in 2023.

"We value Flutter using a divisional DCF model and blend in a value for the US. Rolling forward our methodology, as well as adjusting for our new estimates, our price target increases to 16,000.0p/share - this is composed of 5,900.0p/share for the ex-US business and 10,100p/share for the US business," said the German bank.

Berenberg also reiterated its 'buy' rating on the stock.

Citi lifted its price target on Rolls-Royce on Tuesday to 255.0p as it cited "a clear route to much better cash flow".

The bank said it had taken a "deep dive" into the company's underlying cash flow and the upside potential from the chief executive's as yet unquantified turnaround plan and concluded that Rolls-Royce offers a continued strong investment performance.

It pointed to strong underlying cash flow improvement over the next five years, with over £1.0bn improvement coming from non-systemic elements dropping out. It also said a widebody recovery will turn the Civil Aerospace business and improve sentiment.

Citi said: "The results of the performance review, closing performance gaps and releasing working capital could give 65.0p further upside as new mid-term targets are unveiled in H2."


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