Barclays: Flutter and Entain 2023 EBITDA to rise 12%-13%
Banking giant’s latest report forecasts positive return for industry leaders but warns of increased costs of safer gambling measures
Barclays has upgraded both Flutter Entertainment and Entain’s 2023 financial models driven by a combination of strong M&A and US operations.
In the banking giant’s latest equity research report, it was positive about the outlook for the financial growth of the London-listed operators in the next financial year.
Barclays said it expected Flutter’s group revenue, excluding the US, would jump 16% and EBITDA would rise 13%, driven by its recent acquisition of Italian gambling firm Sisal.
Looking at US operations, the majority of which comes under the FanDuel brand, Barclays noted a 2023 revenue growth of 29% as a result of expansion into new states, namely Ohio, Maryland and Massachusetts.
In terms of full group EBITDA margin, Barclays noted an expected rise from 14.4% in 2022 to 17.8% in 2023 and 20.2% in 2024.
However, Barclays did forecast an 8% dip in EBITDA in Flutter’s UK and Ireland division due to rising costs in retail and the impact of safer gambling measures on its online arm.
Barclays said Flutter remained at risk of being hit with a further £30m in costs because of the potential £2 online slot limits and tougher affordability measures.
Looking at Entain, Barclays anticipated an 11% rise in online revenue and a 12% increase in EBITDA due to the recent acquisitions of BetCity in the Netherlands and Croatian operator SuperSport.
The bank expects BetCity to return £150m in revenue along with £35m in EBITDA while SuperSport is expected to deliver £167m in revenue and £92m in EBITDA.
Overall group EBITDA is expected to rise 9% to £1.13bn.
In terms of costs for Entain, Barclays added a potential £20m impact to EBITDA should there be no government policy with regard to energy bills for businesses relating to Entain’s retail arm, along with a £12.5m cost increase in soft launching the Unikrn esports betting brand.