1st Feb 2023 14:16
(Alliance News) - Entain PLC on Wednesday impressed investors, raising its guidance for 2022 and saying it has entered 2023 with "good momentum".
Shares in the London-based gaming and sports betting firm were up 2.1% at 1,519.00 pence each on Wednesday afternoon in London, making the stock one of the best performers in the FTSE 100 index.
Entain said it expects earnings before interest, tax, depreciation and amortisation for 2022 to be in the range of GBP985 million to GBP995 million. It had previously guided for a range of GBP925 million to GBP975 million.
At best, the new guidance represents a 13% rise from 2021's Ebitda of GBP881.7 million.
Shore Capital said the increase is "a particularly encouraging outturn, given the regulatory headwinds faced and the normalisation from Covid."
In the fourth quarter alone, net gaming revenue rose 11% year-on-year and 7% at constant currency.
Entain reported "record" online net gaming revenue. This rose 12% year-on-year, reflecting a "successful men's World Cup, partly offset by weather disruptions to sporting fixtures", Entain explained.
For the whole of 2022, net gaming revenue was up 12%, or 10% at constant currency.
Online net gaming revenue, however, was down 1% compared to 2021, and also down 2% at constant currency. Online revenue performance reflected "strong Covid comparators and the absorption of regulatory changes, particularly in the UK and Germany," the company said.
Looking ahead, Entain said it has started 2023 with "good momentum" across the business.
Shore Capital said: "Looking into FY23, ahead of the update, we were forecasting Ebitda of GBP1.05 billion, with growth primarily from a full year contribution from acquisitions (notably SuperSports), with modest single digit growth in digital (including regulatory headwinds), offsetting a modest (structural) profit decline in retail and further investment in NPD. We would see today's update as supportive of such assumptions, with the prospect for material growth over the medium term."
Davy Research said: "There is limited additional guidance on FY23 in the statement, but the CEO notes that 2023 has started with good momentum across the business and it remains confident in its ability to continue to deliver on its growth strategy.
"The speculation around a potential approach from MGM tends to dominate discussions around the share price at present, but it feels like the timing will be dependent on further regulatory certainty in key markets."
Back in January 2021, Entain said it had received a takeover proposal from US partner MGM Resorts International. The takeover bid was withdrawn just two weeks later.
In 2018, Entain and MGM had signed a joint venture deal, forming BetMGM. BetMGM is a North American sports betting and gaming entertainment company operated as a joint venture between Entain and MGM Resorts International, with each company owning half.
In September 2021, Entain received takeover interest from the US yet again, with New York-listed Draftkings Inc making a cash and shares offer for the bookmaker. In October of that year, Draftkings decided against making a firm offer.
Back in August last year, Entain had reported revenue of GBP2.09 billion for the six months that ended June 30, up 19% year-on-year from GBP1.77 billion. Pretax profit, however, tumbled by 70% to GBP39.5 million from GBP130.6 million.
Shore Capital rates Entain at 'buy', whilst Davy rates the company at 'neutral'.
"Entain was among the top gainers on the FTSE 100 as a winter World Cup helped draw in punters and drive earnings upgrades – though, given this is a one-off benefit, investors will want to see further progress on tapping the opportunity in North America and dealing with regulatory pressures," said AJ Bell investment director Russ Mould.
By Sophie Rose, Alliance News reporter
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