Entain’s management has spelt out a clear path for medium and long-term growth, says Barclays, but the guide for near-term underlying profits [EBITDA] guide is below expectations and now it has to deliver.
Clear evidence of execution is now needed say analysts at the bank, primarily through a recovery in market share and building it up through 2024/25.
Earlier this week, Entain said it was targeting a core profit of US$500 million in 2026 at BetMGM, which it jointly owns with MGM Resorts.
Betting operator Entain said the JV will deliver revenue in 2023 towards the upper end of the US$1.8-US$2.0 billion range and achieve EBITDA profitability in the second half.
In the near term, management is guiding to US$350m y/y growth in EBITDA in 2023 implying a US$230m EBITDA loss this year.
In 2024, EBITDA will also be negative as BetMGM continues investment for growth such as product development, customer acquisition and retention spending and marketing.
BetMGM will fund future investments through internal cash flows with no further capital investments from parents Entain and MGM.
Barclays has an overweight stance on Entain shares with a target price of £11.20.