Two analysts have different views of newly expanded betting group GVC Holdings (LON:GVC) following the acquisition and merger of Ladbrokes Coral into the group.
It was a good deal for Ladbrokes Coral but there’s now more uncertainty for the enlarged GVC, according to HSBC analyst Joseph Thomas, who has today begun coverage with a ‘hold’ rating and a 880p price target.
“While pre-deal GVC was a strongly-performing business, Ladbrokes Coral dominates the enlarged group and we are less enamoured with it. While Ladbrokes Coral’s underlying profits growth has been respectable, it has underperformed our underlying expectations in both the UK retail and online divisions,” the analyst said in a note.
READ: GVC reports rise in 2017 net gaming revenues, boosted by bwin.party
“Only higher synergies than it initially guided have enabled it to meet our original profit forecasts for 2017.
“It’s something that Kenny Alexander, GVC’s highly rated CEO, must be cautious of as he bolts the two businesses together. Investors should be cautious too, given that very little has so far been said about the roadmap to faster growth that he sees as the priority.”
Elsewhere, however, Deutsche Bank analyst James Wheatcroft resumed his coverage of GVC with a ‘buy’ rating and a 1,300p price target – suggesting around 40% upside to the current price of 915.5p.
“We see a re-rating opportunity for GVC as the new business shape better addresses key drivers in global gaming markets: Diversification, scale, consolidation track record, proprietary software platform and exposure to growth markets,” the Deutsche Bank analyst said.