Entain PLC (LSE:ENT) continues to offer an awful lot of upside, about 66%, according to analysts at Deutsche Bank, who have repeated a Buy rating despite weakness in the BetMGM business, which was supposed to be a growth driver.
BetMGM’s second-quarter earnings fell short of expectations, reporting quarterly revenue of $711 million, up 3% year on year but slowing from 6% growth in the first quarter.
The DB analysts pointed to the slowdown being partly due to higher customer acquisition costs amid increased competition from prediction markets and other online sportsbook operators.
Against this backdrop, the bank adds that BetMGM has directed more marketing towards iGaming, and states where customers can use multiple products.
Reacting to the softer-than-expected result, DB reduced its target to 950p from 1,028p but retained its Buy rating, compared with Entain’s latest closing price of 573.8p.
The German bank, in a note, said it is now increasingly important that the iGaming division remained resilient, growing 9% despite greater competition from new market entrants. The segment now generates about 70% of BetMGM’s revenue, it added. Meanwhile, sports revenue was flat, compared with 4% growth in the previous quarter.
