Morgan Stanley has reaffirmed its confidence in Flutter Entertainment, naming it its "Overweight, Top Pick" in the gambling sector for 2025. This endorsement follows the release of Flutter’s FY24 financial results, which recorded $14.05 billion in revenue, and a reaffirmation of its FY25 guidance. While the company lowered its Q4 2024 forecast earlier in January, analysts at Morgan Stanley believe Flutter's 2025 estimates remain conservative, particularly in light of strong performances in key markets such as Italy and the UK.

Key Takeaways from Morgan Stanley’s Analysis

Morgan Stanley has analyzed Flutter’s latest financial disclosures and identified several positive indicators that suggest the company may outperform its current 2025 guidance:

Flutter’s FY24 revenue reached $14.05 billion, despite challenges in Q4.
The company maintained its FY25 guidance, with projected revenue of $15.48 billion – $16.48 billion.
Adjusted EBITDA is expected to rise to $2.94 billion – $3.38 billion.
Strong performance in Italy and high win margins in the UK could lead to an upward revision in forecasts.
Morgan Stanley believes these factors indicate that Flutter’s 2025 outlook may be too conservative, potentially setting the stage for better-than-expected results.

Flutter’s Q4 2024 Performance and Guidance Revision

Earlier in January 2024, Flutter announced a downward revision in its Q4 financial guidance, reducing expectations for both revenue and EBITDA:

The company attributed the downward revision to short-term challenges, but Morgan Stanley’s latest assessment suggests that these setbacks may not significantly impact Flutter’s long-term growth trajectory.

Strong Market Performance Outside the U.S.

While Flutter’s growth in the U.S. is closely watched, the company’s international markets have also been key contributors to its success:

Italy: Flutter has seen strong market traction in Italy, with its recent acquisition of Snaitech expected to boost revenues further. However, the deal is still subject to monopoly approval.
UK: The company has benefited from high win margins, contributing to a solid overall performance in the region.
These international gains support Morgan Stanley’s view that Flutter’s FY25 guidance could be exceeded.

The Italian Lottery and Market Expansion

Another crucial factor in Flutter’s long-term strategy is its bid for the Italian lottery license. The company is competing against Sisal, another Italian brand, for the lucrative contract. During its Q4 earnings call, Flutter’s management indicated that they were still evaluating their options regarding the Italian lottery market.

If Flutter secures the license, this could provide a significant revenue boost in the coming years, strengthening its position in the European gambling market.

Investor Sentiment and Market Implications
Following Morgan Stanley’s positive assessment, investor sentiment toward Flutter is expected to remain strong. The company’s ability to navigate market fluctuations, expand internationally, and strategically position itself for growth has made it a favorite among analysts.

Key Investor Insights

Stable Revenue Growth: Despite Q4 challenges, Flutter is poised for double-digit revenue growth in 2025.
Profitability Potential: If EBITDA meets or exceeds projections, the stock could see upward momentum.
Expansion Strategy: Acquisitions and international market penetration will be critical factors in sustaining long-term growth.

Final Thoughts: A Strong Play in the Gambling Industry

With solid financials, strong market positioning, and potential upside in its 2025 performance, Flutter Entertainment remains a compelling investment opportunity. Morgan Stanley’s assessment underscores the company’s resilience and growth potential, making it a standout stock in the gambling industry.

As the company moves forward with its strategic initiatives—including the Snaitech acquisition and Italian lottery bid—investors will be keenly watching whether Flutter can exceed expectations and deliver strong returns in 2025.