After Entain PLC's (LSE:ENT) profit warning sent its shares tumbling it "looks an attractive time" for US partner MGM Resorts (NYSE:MGM) to make another bid, analysts at Deutsche Bank suggested.
The FTSE 100-listed bookmaker, which owns Ladbrokes, Bwin and a 50% share of US-based BetMGM, plunged 13% on Monday after surprising the market with news of softer third-quarter online gaming revenue due to some unhelpful sporting results and regulatory headwinds mostly in the UK.
Deutsche said management's assessment of the impact on full-year trading was "reassuring", though will result in a 2% tweak down of underlying profit guidance, which saw the shares "given the stock market equivalent of a red card".
Analysts at the bank said the market's reaction also reflected "investor concerns over the level of Entain's M&A activity - and the decision to partly fund it through an equity placing", which took place in June.
The hard hit to the shares sees them now trade on an EV/EBITDA ratio of just 8.7 times 2024 forecast numbers, or 5.8 times if stripping out the value of the BegMGM joint venture.
"The share price performance suggests no expectation that JV partner MGM has any intention of returning with another bid," the analysts said.
MGM's last offer of £8 billion was made at a value of 0.6 MGM shares per Entain share, which the analysts noted "is now worth 89% more than Entain's current share price".
"But it looks an attractive time for MGM to take another look, given the strategic attractions of consolidating control of its betMGM JV."
The analysts, who nudged down their share price target for Entain from 1,750p to 1,626p but retained a 'buy' recommendation, did not mention that MGM has been having its own digital problems of late, namely a major cyber attack, so might not feel now is as an attractive time as the German bank.