William Hill Plc (LON:WMH) has been upgraded by JP Morgan following this week’s equity raise which the American bank reckons will allow the bookie to absorb regulatory shocks.
The company raised £224mln in a cashbox placing, issuing 175mln shares, or 19.99% of its outstanding equity, at a price of 128p per share.
JP Morgan, in a note, highlighted that the placing took advantage of a share price recovery from the March low of 37p.
The funds will allow the company to meet investment requirements in the US and cures its leverage problem ahead of looming regulatory threats, in the UK.
“In our view, the £224m of gross proceeds from this week’s placing relax the constraints on William Hill’s ability to chase the US sports betting (and gaming) opportunity, and bring down the uncomfortably high leverage,” analyst Ted Nyhan said.
“We believe the new capital structure is capable of absorbing a possible regulatory shock (e.g. the potential imposition of £2 online slots stake limits from April 2021) and weakness in the UK Retail estate.”
JP Morgan upgraded its rating to ‘overweight’ from ‘neutral’ and lifted its price target to 200p, from 160p.