A quarterly update from Entain PLC (LSE:ENT) showed the bookmaker is enjoying good momentum and suggested that it’s not all about its US joint venture, according to analysts, though it remains the biggest issue for investors.
Net gaming revenue growth of 11% at constant currencies in the first quarter, or 15% in total, thanks to the benefit of forex swings, was in line with expectations, said Barclays, while growth of active customer of 19% is “encouraging and offers momentum into Q2”.
Strategic investments by the FTSE 100 bookmaker, such as the SuperSport acquisition in central Europe and BetCity in the Netherlands last year and the purchase of 365scores this month https://www.proactiveinvestors.co.uk/companies/news/1011324/entain-nets-sports-media-firm-365scores-for-up-to-us-160mln-1011324.html are “paying off”, said Ivor Jones at Peel Hunt.
Although BetMGM, its 50-50% JV with MGM Resorts “stands out” as the company’s best corporate deal and is on track to reach profitability later this year, Jones said “multiple other investments are contributing to growth and improving quality”.
Jefferies called the update “robust” despite tough comparative growth from a year ago, which “bodes well for achieving full-year guidance and market estimates”.
Consensus forecasts are not expected to change as a result, said Jefferies analyst James Wheatcroft, though easier comparisons later in the year should lead to a pick-up in momentum.
Confirmation of second-half profitability for BetMGM from the company “should mitigate concern around recent market share losses”.
Wheatcroft sees support “and likely speculative share price action” as the six-month window reopens for MGM Resorts in early August, should the US casino giant make a U-turn and decide it does want to bid for its UK partner after all.
He said investors remain focused on this potential for MGM bid interest to return, any impact from the UK gambling white paper, and the “profitability tipping point” for the online gambling sector in the USA along with market share movements Stateside.