Plagued by a significant dip in market value this year, Entain Plc has a couple of strategies to consider to shift its fortunes. These options are based on the analysis of Susquehanna analyst Joseph Stauff who has not only reinstated coverage of the Ladbrokes owner but has also imparted a promising rating and a price target suggesting an upside of 17% from its current position.
Stauff elucidates two potential but distinctly attractive strategies for Entain’s stock growth. The first revolves around focusing firmer on indigenously grown markets outside of the US.
Notably, Entain balances its US endeavors through a 50% hold in BetMGM. Globally, Entain has been quite proactive, leveraging acquisitions, albeit some met with critical investor eyes, to strengthen its financial top-tier growth.
Despite having ongoing acquisitive designs, the Coral operator has hinted at staying open to amplifying organic growth and consolidating market position globally, that too without resorting to deal-making. This could potentially captivate investors.
In late September, Entain’s shares experienced a steep dive following a less than inspiring net gaming revenue (NGR) forecast for 2023 because of subdued online gaming progress, supplemented by lukewarm growth in Australia and Italy.
A different possible route towards resurrecting investor faith and buoying growth could lie through some sort of settlement with BetMGM. As per Stauff, such agreement would unlock their existing rigid operating architecture which needs to be addressed promptly before risking an irreversible decline in market share.
However, the Susquehanna analyst kept specifics about the probable form of agreement under wraps. An interesting hypothesis could involve Entain selling its share in BetMGM, possibly aligning with MGM Resorts International. This could translate into a major windfall for the sellers since MGM has publicly shown keenness in commandeering iGaming and online sportsbook operators.
While speaking at the Global Gaming Expo in Las Vegas, Entain CEO Jette Nygaard-Andersen hinted that joint ventures have a shelf life, indicating a plausible future state with BetMGM exhibiting different ownership configurations.
With a roughly 31% fall in share value this year, Entain’s market valuation sits at a mere $7.22 billion, much lower than the $11.06 billion bid by MGM in January 2021, and is a fraction of DraftKings’ over $20 billion proposition later that year.
Despite facing rocky times, Entain’s name has popped up regularly in the list of speculative takeover candidates, and the ongoing market chatter around such takeover conjectures might just exacerbate given the reachable market cap of $7.22 billion.
Yet, Nygaard-Andersen has not shown any proclivity towards offloading the company. In fact, Entain’s recent acquisition spree characterizes the company more as a buyer than a seller.
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