Image Alt

The Investing Box

  /  Editor's Pick   /  Why I think Flutter Entertainment shares could soar in 2022

Why I think Flutter Entertainment shares could soar in 2022

Light bulb with jester hat perched on top

Flutter Entertainment (LSE:FLTR) has struggled over the past couple of months. This has been reflected in a downward move in the share price. Even though the shares are down around 26% over one year, most of this move (24% of it) has come in just the past three months. Yet with a potentially promising outlook for next year, I think that Flutter Entertainment shares could be a good discount buy for me right now.

Short-term struggles

It hasn’t been easy going for Flutter of late. Q3 results released in early November did show some good growth, but it also saw the business cut its full-year guidance.

For example, adjusted EBITDA was cut from previous projections of £1.27bn-£1.37bn to £1.24bn-£1.28bn for the group, excluding the US. In the US, Flutter now expects a loss for the year at the higher end of the previous guidance. It spoke of unfavourable sports results as a key factor in October that contributed to this revision lower in numbers for the year.

Aside from the numbers, Flutter Entertainment shares also fell as a large number of MPs have been lobbying for a review of gambling laws in the UK. In late November, an open letter was submitted by MPs to push for more stringent limits as more than 55,000 children (11-16 year olds) are now claimed to be gambling addicts. 

Any tightening of restrictions would mean a revenue negative hit for Flutter, so the shares dropped on this news.

Reasons to be positive

The above points have pushed Flutter Entertainment shares down over the past quarter. But I think that they’re starting to be attractively priced. I note the concerns raised above as potential risks, but I do also see plenty of reasons to be positive.

For example, the business recently said it’s buying online bingo operator Tombola for £402m. This deal is expected to complete in Q1/Q2 next year. I think this is a smart move as it gives Flutter a more diversified range of companies within the group. With PaddyPower and BetFair concentrating on the sports market, having a more traditional casino company should help to spread risk. After all, with negative sports results being flagged in the Q3 report, Tombola revenues should help to balance this out if issues are still there in 2022.

Another reason why I think Flutter Entertainment shares could do well next year is continued growth in the US. In the most recent results, US revenue for the first nine months of the year was up 85% versus 2020. America is a huge and potentially lucrative market for the firm. If Flutter can continue with the current strategy, then I’d expect this growth to continue next year.

Overall, I think that the recent dip in the share price represents a good opportunity for me to buy. I’m considering doing so at the moment. There are risks around recent results and potential restrictions. But I feel the potential rewards from the US and new acquisitions should outweigh these.

The post Why I think Flutter Entertainment shares could soar in 2022 appeared first on The Motley Fool UK.

5 Stocks For Trying To Build Wealth After 50

Markets around the world are reeling from the coronavirus pandemic…

And with so many great companies still trading at what look to be ‘discount-bin’ prices, now could be the time for savvy investors to snap up some potential bargains.

But whether you’re a newbie investor or a seasoned pro, deciding which stocks to add to your shopping list can be a daunting prospect during such unprecedented times.

Fortunately, The Motley Fool is here to help: our UK Chief Investment Officer and his analyst team have short-listed five companies that they believe STILL boast significant long-term growth prospects despite the global lock-down…

You see, here at The Motley Fool we don’t believe “over-trading” is the right path to financial freedom in retirement; instead, we advocate buying and holding (for AT LEAST three to five years) 15 or more quality companies, with shareholder-focused management teams at the helm.

That’s why we’re sharing the names of all five of these companies in a special investing report that you can download today for FREE. If you’re 50 or over, we believe these stocks could be a great fit for any well-diversified portfolio, and that you can consider building a position in all five right away.

Click here to claim your free copy of this special investing report now!

More reading

Jon Smith and The Motley Fool UK have no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.