UPDATE: Shares of Entain Plc surged 2.6% in London today following an optimistic report from Jefferies analysts discussing new strategic developments for the company’s US joint venture and potential mergers and acquisitions (M&A). The betting firm, co-owner of BetMGM alongside MGM Resorts International, became the top performer on the FTSE 100 as investors reacted to the news.
Analysts at Jefferies raised their price target for Entain to GBP 12 ($16.20), up from GBP 11.40 ($15.39), maintaining a “buy” recommendation. This significant adjustment reflects confidence in Entain’s operational stability and strong technology investments, which position the company well for future growth and value-enhancing deals.
The company’s shares have now risen approximately 25% this year, in stark contrast to the broader FTSE 100’s increase of only 14%. Jefferies analyst James Wheatcroft highlighted that Entain’s latest interim results indicate its technology is robust enough to support diverse business endeavors, particularly in the competitive landscape of BetMGM.
Wheatcroft emphasized that investor focus is shifting back to M&A activity, with Entain’s US partnership poised to be a key driver. His valuation analysis suggests a potential upside of around 55% from current stock levels, even absent a takeover bid for Entain.
Analysts believe that the ongoing speculation regarding BetMGM’s future ownership is intensifying. Many market observers suspect that MGM may seek to acquire Entain’s stake, which could lead to substantial financial returns for the company and appease activist investors demanding higher returns.
Amid this backdrop, Wheatcroft suggested that spinning off BetMGM into a standalone entity or leveraging its technological platform could enhance its market value, thereby benefiting shareholders.
Entain is under pressure from notable activist investors, including Eminence Capital and Corvex Management. Notably, Keith Meister, head of Corvex, also sits on MGM’s board, fueling speculation about potential shifts in the management of their joint operations.
Further complicating matters, reports from Australia indicate that rival betting firm Betr is eyeing Entain’s Australian assets, which have faced recent leadership turnover and regulatory challenges. Analysts estimate that divesting these operations could yield approximately $890 million.
Currently, investor sentiment toward Entain remains largely positive, with 14 out of 21 analysts rating the stock as a “buy” or higher. The median price target, according to LSEG data, stands at GBP 11.11 ($15).
As the US ventures gain momentum and activist pressures mount, market experts suggest that Entain’s next strategic moves will be critical in determining the company’s future valuation. Investors are keenly watching these developments, which could shape the betting landscape significantly.
Stay tuned for more updates as this story evolves.