Top-Ranking Gaming Stocks: Flutter and IGT Shine Amid Trade Disputes
In a recent analysis, Stifel analyst Steven Wieczynski has suggested that Flutter Entertainment (NYSE: FLUT) and International Game Technology (NYSE: IGT) could outperform other gaming stocks during a potential recession.
## Reasons for Potential Outperformance
1. **Resilience to Economic Downturns** Both companies have business models and market positions that might make them more resilient during economic slowdowns. Their diversified revenue streams and strong brand presence can help sustain earnings even when consumer spending contracts.
2. **Stable Revenue from Core Segments** Flutter Entertainment benefits from a mix of online sports betting and gaming platforms, which tend to have more stable or even counter-cyclical demand compared to traditional casino operators. IGT, with its strong presence in gaming technology and lottery services, often enjoys steady, recurring revenues less sensitive to economic fluctuations.
3. **Growth Opportunities in Regulated Markets** Both firms are positioned well to capitalize on the ongoing expansion of regulated gaming markets globally, including the U.S. This growth potential could offset some recessionary pressures by opening new revenue channels and increasing market share.
4. **Innovation and Digital Transition** Wieczynski likely highlights their investments in technology and innovation—Flutter with its digital-first sports betting platforms, and IGT through advanced gaming systems—as factors that help maintain customer engagement and operational efficiency during tougher economic times.
5. **Strong Balance Sheets and Cash Flow** Companies with solid financial health and positive cash flow generation are better equipped to weather recessions. Both Flutter and IGT have demonstrated strong balance sheets, giving them the flexibility to invest and grow when competitors might need to cut back.
## Additional Insights
- Flutter's asset-lite model could be alluring for investors in the current environment. - Wieczynski sees potential upside for Flutter's FY26/27E due to TAM momentum, regulation-driven consolidation, bottoming headwinds, and top-line synergies. - Some of the recent weakness in IGT's stock is related to uncertainty surrounding the Italian lottery contract, but Wieczynski believes IGT is likely to retain that business. - The analyst's report indicates that the gaming and leisure coverage universe is likely to remain out of favor with investors for the remainder of this year as tariff effects take hold.
It's important to note that this article is for informational purposes only and should not be considered financial advice. Always consult with a financial advisor before making investment decisions. The article was last updated on April 8, 2025, at 01:41h.
- The resilience of Flutter Entertainment's financial health and its diverse business model, encompassing online sports betting and gaming platforms, may contribute to its outperformance among gaming stocks during a potential recession.
- International Game Technology (IGT), with its stable revenue streams from gaming technology and lottery services, could also outperform other gaming stocks during a recession due to its less volatile revenue structure.
- Both companies, Flutter Entertainment and IGT, are poised to capitalize on the growth opportunities presented by the expansion of regulated sports betting and gaming markets, such as the U.S., which could mitigate the impact of a recession.
- The technology investments made by both Flutter Entertainment and IGT, including digital-first sports betting platforms and advanced gaming systems, may help them maintain customer engagement and operational efficiency during economic downturns.
