Jefferies, the American investment bank, has reaffirmed its strong price target for Entain PLC (LSE:ENT), the gaming firm that owns Ladbrokes, Coral and BetMGM.
The bank's analysts have set their sights on a target of £13.35 per share, a 51% premium to the current share price.
In its latest note, Jefferies has slightly lowered its expectations for Entain's earnings before interest, taxes, depreciation, and amortization (EBITDA) for the fiscal year 2023 but anticipates growth in the following years.
Despite this, the investment bank's outlook remains optimistic, citing the company's low valuation as a key reason for their 'Buy' recommendation.
Entain has recently established a capital allocation committee, signalling a cautious approach to spending and mergers and acquisitions (M&A) in the near future.
The company is expected to maintain its current dividend payout, which is the portion of earnings distributed to shareholders, at around 30%.
Looking ahead, Jefferies notes potential challenges in various markets, including Australia and Italy, but also opportunities like the expected regulatory changes in the United Kingdom. The implementation of the UK's new gambling regulations, known as the White Paper, could shift market dynamics in Entain's favour.
In late afternoon trading, the stock was up almost 2% at 937.2p.