Analysts have responded well to Entain PLC (LSE:ENT)’s latest full-year results, as the bookmaker continued its expansion and maintained earnings growth.
Underlying earnings (EBITDA) for the gambling, gaming and entertainment group grew 5% over 2020, as visits to its shops recovered to 90% of pre-pandemic levels.
Underlying operating profits for the company fell 9% as the group invested heavily in its burgeoning US joint venture, BetMGM, where revenues increased nearly five-fold as US gambling laws were liberalised.
A note from Morgan Stanley (NYSE:MS) described Entain's full-year update as “confident with an unchanged outlook”, maintaining a 2,530p price target, which it said would come as some relief given a broadly bearish UK market.
“We expect the shares to moderately outperform today on the back of a reassuring and surprise-free update, and expect no changes to consensus forecasts.”
Investec, meanwhile, maintained a 2,400p price target on the back of the results, saying Entain remained “the best investment choice in the gambling space”.
Entain, which owns Ladbrokes, Coral, Sportingbet, Foxy Bingo and many other gambling brands, upgraded its revenue target for BetMGM from US$1bn to US$1.3bn, expecting positive EBITDA for the company in 2023.
UK gambling companies are in an expansion-driven transitionary period as US regulations relax and the UK market proves more challenging than previously, particularly in the face of an upcoming White Paper on the country's gambling laws.
Rival Flutter Entertainment's shares fell this week as the group grappled with flat UK revenues and accusations of “virtue signalling” by an analyst, despite strong growth in its flagship US subsidiary FanDuel.
Entain’s minimal exposure to Russian and Ukrainian markets gave analysts further cause for optimism when compared with Flutter’s £41mln Russian market.
Shares in Entain were up 2.88% to 1,605p as of 11:36 GMT this morning.