Media and entertainment giant Fox Corporation (NASDAQ:FOXA) and global betting and gaming group Flutter (GB:FLTR) announced the closure of FOX Bet, a sports betting platform. The move will enhance the near-term profitability of FLTR’s U.S. division, noted Goldman Sachs analyst Ben Andrews.
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Fox Bet was launched in 2019 by FOX and TSG (The Stars Group US). Later, Flutter acquired TSG in 2020. Fox Bet was available in Colorado, New Jersey, Michigan, and Pennsylvania.
Flutter to Benefit from the Move
Flutter’s U.S. division includes popular FanDuel, TVG, FOX Bet, and PokerStars brands. Following the announcement, Andrews reiterated a Buy on FLTR stock. The analyst said that the move would remove FOX Bet losses from FLTR’s U.S. division, thus enhancing near-term profitability. Moreover, it will provide FLTR with the option “to make greater use of PokerStars as a second iGaming brand in the US,” the analyst added.
In 2022, the U.S. segment delivered revenues of $3.2 billion. On the other hand, it posted a loss of $313 million.
Looking ahead, the analyst expects FLTR’s U.S. division to swing to profitability in 2023, and the business will become the “key earnings growth driver for the group.”
Fox Corporation to Retain Flutter Stake
Following the phased closure of FOX Bet’s operations (planned between July 31 and August 31), FOX will retain the future use of the FOX and FOX Bet brands, which include FOX Bet Super 6. Further, the company plans to launch an all-new FOX Super 6 game later this year.
In addition, Fox Corporation will continue to hold its option to acquire 18.6% of the FanDuel brand. Meanwhile, it will continue to keep a 2.5% stake in Flutter.
As Fox and Flutter are winding down the loss-making FOX Bet business, let’s look at what analysts recommend for these stocks.
Is Flutter Stock a Good Buy?
With 10 Buy and three Hold recommendations, Flutter stock has a Strong Buy consensus rating. Further, analysts’ average price target of 17,914.17p implies 16.14% upside potential from current levels.
Is Fox a Buy or a Sell?
Fox Corporation stock has a Hold consensus rating on TipRanks based on one Buy, three Hold, and one Sell recommendation. Further, analysts’ average price target of $35 implies 4.63% upside potential.
