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Brokers: William Hill the laggard in gambling race says Investec

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Labroke Coral a potential winner reckons Investec

Things are not looking great for gambling sector with an increasingly tough regulatory backdrop and uncertain economic outlook over the next 12-18 months, argues Investec.

But for investors that throws up the prospect of more M&A due to increased regulation, rising costs and intensifying competition.

Playtech PLC (LON:PTEC) is the broker’s conviction buy. Also buys (but with less conviction) are GVC PLC (LON:GVC) and 888 PLC (LON:888).

Investec likes the recent mergers, with PaddyPower Betfair a hold and the newly formed Ladbrokes Coral an add but the area to avoid is bookie shops themselves.

And for that reason poor old William Hill (LON:WMH) gets a downgrade to sell with a 243p target.

Easyjet (LON:EZJ) has received a double upgrade from HSBC, which sees the low cost airline as cheap compared to rival Ryanair (LON:RYA).

The broker’s rationale is straightforward enough.

Either Easyjet’s management takes the necessary steps to turn trading around and reduce the current valuation discount to Ryanair or someone else will.

Target prices are now 1,150p (from 800p) for Easyjet and €12 (from €8.50) for Ryanair.

The current share price offers a “compelling entry point” for prospective investors in Sound Energy PLC (LON:SOU), which has enjoyed further drill success in Morocco.

That at least is the opinion of Cantor Fiztgerald analyst Sam Wahab, who repeated his ‘buy’ and 101p a share price target for the stock.

“Sound has grown its acreage position to become a material player in Mediterranean gas,” he said.

Prudential PLC (LON:PRU) is worth considering again after a tough years says heavyweight broker Deutsche Bank.

The headwinds facing the life insurer that intensified this year are starting to ease believes the German broker, which has upped its target price to 1,590p from 1,385p.

Management has taken corrective action and with the recent rise in bond yields the capital position is returning to robust levels.

Broker Panmure repeated a 'hold' stance on the shares, noting it had downgraded the stock at the start of September.

Analyst Kieron Hodgson said while he sees longer term value in the firm, short term optimism was too bullish.

The broker reckons the investment programme to increase production to over 80,000 ounces a year by 2021, the low-cost nature of the operation, an unrivalled yield and significant cash resources offer enough incentives for investors to ensure the Caledonia story remains interesting.

Beaufort Securities thinks shares in Solo Oil PLC (LON:SOLO) could almost quadruple if its Ntorya Gas Project in Tanzania progresses as has been suggested.

Back in 2012, Solo and Aminex plc (LON:AEX)  – which work together on this project under the Ruvuma Project Sharing Agreement – had a commercial gas discovery with the Ntorya-1 (NT-1) well.

Even if the discovery stopped here, analysts at City broker Beaufort say it would still be a decent find, but it’s expecting more.


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