Ladbrokes owner Entain PLC (LSE:ENT) has been hit with downgrades of sorts by Deutsche Bank analysts, which cut forecasts after better-than-expected earnings last week were overshadowed by a regulatory cost hit.
Though the bookmaker outdid market expectations with an underlying profit of £974 million, news that new rules in the UK and Netherlands would cause a £40 million hit this year sent shares to their lowest in three and half years.
This is as the UK prepares to introduce stake caps for online slot games, while tighter deposit limits are also due in the Netherlands.
“Entain delivered full-year results a touch above market expectations,” Deutsche acknowledged in a note. “However, it continued to struggle with rising regulatory costs.”
Deutsche lowered its forecast for Entain’s pre-tax earnings for the current year by 5% to £986.7 million as a result.
This prompted a share price target cut from 1,113p to 1,089p, though this still marks a prospective rise of 40% from Tuesday's close and is why the bank maintained its 'buy' rating.
Shares rose 0.9% on Wednesday.