Wells Fargo: The market overreacted to rumours of a £3 billion tax increase and raised Flutter (FLUT.US) rating to “increase holdings”

The Zhitong Finance App learned that Wells Fargo published a research report to raise the rating of gaming giant Flutter Entertainment (FLUT.US) from “holding shares and watching” to “increasing holdings.” Boosted by this, the stock rose about 5% before the US market on Monday.

Analyst Daniel Politzer and his team said that Flutter's current share price reflects the near worst of UK taxes and/or minimum relief, and believes that the sportsbook giant's US financial targets for the 2027 fiscal year reflect its conservative attitude compared to the structured holdings provided by the company and key performance indicators for potential US market size growth.

Politzer also pointed to Flutter's product innovation and evolving regulatory environment, which has potential in Florida, Texas, and California. Wells Fargo's view is that scale will spawn larger scale, which means Flutter's global footprint allows it to take advantage of the best technology/product innovations.

Additionally, Wells Fargo believes that Flutter's valuation is quite attractive given its generous return on capital and a three-year CAGR of 25%.

According to information, Flutter's stock price fell 8.78% last Friday due to news about UK taxes. The report said that British Treasury officials are considering a “surprise tax” of 3 billion pounds on the gaming industry. The report indicated that Ministry of Finance officials are evaluating proposals that may eventually double part of the taxes on online gambling and gaming companies to fill the £22 billion public finance loophole.