Entain PLC (LSE:ENT) rose another 5.0% on Monday after an upgrade by Jefferies to ‘buy' from ‘hold.’
The broker said management change and a new activist investor with extensive gambling sector experience signpost a positive share price dynamic.
Last week, Entain CEO Jette Nygaard-Andersen stepped down from her position as CEO while activist investor Corvex Capital disclosed it now owns a 4.4% stake.
Jefferies explained the added significance of this is that Corvex founder and managing partner Keith Meister sits on the MGM board and Corvex owns a 2% stake in MGM.
Entain and MGM own a betting joint venture, BetMGM, and Jefferies thinks possible options ahead include the sale of Entain to MGM, the sale of the BetMGM stake, and the sale of other assets, in addition to finding a suitable CEO.
It suggested MGM may wish to revisit its strategic desire to own 100% of the BetMGM jv.
Jefferies accepted the prospect of Entain M&A may deter some CEO candidates but it still sees scope “for a highly credible CEO to land at Entain.“
“We therefore take a more constructive approach, upgrading to ‘buy’ with new £12.15 price target.”