Broker tips: Flutter Entertainment, Centrica

Berenberg lifted its price target on Flutter Entertainment to 18,600.0p from 17,000.0p on Monday and reiterated its ‘buy’ recommendation on the stock as it highlighted strong growth and balance sheet flexibility.

The bank said Flutter was its “top pick” in the leisure space and sits in its “growth” bucket for FY24.

“Our investment thesis for Flutter is simple – the business is a market leader and we expect strong growth both in existing markets and in the lucrative US market,” it said. “On the latter point, the company continues to go from strength to strength, holding more than half the betting market in Q4 and more than a quarter of the iGaming market.”

Berenberg said its £186 price target was composed of £133 for the US business and £53 for the ex-US business.

“While shares are not cheap on 35.6x FY24 price-to-earnings, we expect the business to deliver a +35% EPS CAGR and for that multiple to fall rapidly in later years,” it said.

Analysts at Citi reiterated their ‘buy’ rating on energy and services company Centrica on Monday following the publication of the group’s full-year results.

Fundamentally, Citi said the group appears to have made operational progress in further strengthening its retail and services businesses, with a clear line of sight for further cost reduction through the removal of duplicate IT costs and for growth in the on-demand market.

“We see scope for further cash return through share buyback, supported by further improvements that we anticipate in Centrica’s net cash position to over £3.0bn by FY24,” said Citi.

Citi also noted that market participants’ main concern was on its underlying net cash position. However, it highlighted that these concerns were potentially “misplaced”, as it said any adjustment for customer money should also be accompanied by receivables owed to Centrica – a net addition to the cash position.