Entain PLC (LSE:ENT) shares have climbed after investment bank Jefferies highlighted the stock’s attractions, despite lowering estimates and its price target for the betting operator.
Jefferies noted higher interest, increased minorities (STS) and a higher share count after the recent c8% placing leads it to cut EPS forecasts by 14%, 12% and 12% for the next three financial years.
It also lowered its price target for the owner of Ladbrokes and Coral to 1,460p from 1,850p.
But it has retained a 'buy' rating.
It thinks that despite few shorter-term trading catalysts, “a low valuation, scrutiny around capital allocation and ongoing MGM speculation will underpin” Entain shares.
The broker thinks the 15% fall in the share price suggests downgrades are now priced in.
Jefferies noted the previous MGM deal structure of 0.6 MGM shares per Entain share, equates to c£20.50 per Entain shares now, around 75% ahead of the current share price.
Shares rose 2.6% to 1,183p.