Berenberg hikes target price on 'finely balanced' Flutter
Analysts at Berenberg hiked tier target price on bookmaker Flutter from 6,500p to 7,00p on Wednesday, stating the group was "finely balanced" to withstand the current coronavirus-fuelled period of disruption.
Berenberg said prior to retail closures and disruptions to sporting events due to the Covid-19 outbreak, Flutter had been performing well across all its divisions.
While a favourable win margin contributed to this performance, the analysts stated that underlying active customer trends for Flutter remained "strong".
At the same time, prospective mergee, The Stars Group's international business had also performed "exceptionally well", especially during the period of disruption.
However, the German bank noted that while Flutter's operational performance is encouraging, the group would trade at a premium to the sector when the TSG deal completes - with the resulting high leverage (+3.5x on deal completion) and potential integration risk.
Hence, the analysts said they continued to believe that the risks and opportunities were finely balanced and reiterated their 'hold' rating on Flutter.