Rank Group PLC (LSE:RNK), the betting operator, could see its operating profits quadruple in the coming years, according to analysts at Shore Capital.
During the 2023 financial year, profits slumped to £20.3 million as inflation diminished margins, input costs increased and customer demand stunted.
However, analysts believe the 2024 financial year could see profits rally to around £44 million because of improved performances, particularly from its Grosvenor Casino division, which has received significant investment from Rank’s management and experienced an uptick in trading in venues outside of London.
Analysts believe the Mecca Bingo owner could then see its profits rise to £80 million in the next few years, with the company also set to receive a £20 million boost when industry reformations are introduced as set out by the gambling white paper.
“All-in, we see a roadmap for profit to recover to the £100m generated in 2019, equivalent to 14p per share,” ShoreCap analysts added.
Noting that this scenario could mean shares become worth more than 200p each, the UK investment group believes “this emerging opportunity is yet to be reflected in the valuation” and therefore rates the stock a ‘buy’.
Shares in Rank opened at 79p on Monday and are currently trading around 1% lower.