Entain Plc, a company whose market value has been struggling this year, is exploring options to reverse its fortunes. Susquehanna analyst Joseph Stauff suggests that the Ladbrokes owner can consider two paths to improve its standing in the market. Stauff initiated coverage of Entain with a “positive” rating and a price target indicating a 17% upside from current levels.
Stauff highlighted the potential for renewed emphasis on organic growth outside the U.S. as one path for Entain to pursue. He also mentioned that the operator’s U.S. exposure comes from its 50% stake in BetMGM, with acquisitions being used to bolster growth outside the U.S.
The company’s disappointing 2023 net gaming revenue forecast and slow growth in Australia and Italy have contributed to Entain’s struggle this year. However, the potential for growth and improvement lies in a renewed focus on organic growth and market share in these areas.
Another potential avenue for Entain to restore investor confidence is to reach a compromise with BetMGM. Stauff suggests that the company should release its inflexible operating structure before risking a more permanent decrease in market share.
While the specifics of such a compromise were not detailed, one possible option would be for Entain to sell its half ownership in BetMGM to partner with MGM Resorts International. This move could result in a significant financial gain for Entain, as MGM has expressed interest in controlling all iGaming and online sportsbook operations.
Despite Entain’s market capitalization dropping to $7.22 billion this year, below previous acquisition offers and speculation of being a takeover target, CEO Jette Nygaard-Andersen hasn’t signaled a willingness to sell the company. Instead, the company has been more focused on acquisitions, framing it as a potential buyer rather than a seller.
Overall, Entain is exploring various avenues to reverse its market struggles and regain investor confidence, including focusing on organic growth and considering a compromise with BetMGM.