9th Mar 2023 19:01
(Alliance News) - Shares in Entain PLC slipped on Thursday as a fall in online gaming and concerns of a tougher regulatory environment took the gloss off top-end annual profit.
In London on Thursday shares in Entain closed down 3.9% at 1,338 pence each.
The owner of Ladbrokes and Coral posted underlying earnings before interest, tax, depreciation and amortisation of GBP993 million in 2022, up 13% from GBP881.7 million a year before, at the top end of upgraded guidance given in February.
Victoria Scholar at interactive investor noted Entain benefited from "a busy sporting calendar last year with the FIFA World Cup in particular," which helped it "achieve a forecast-topping bottom line result."
However, the earnings picture was mixed as earnings in its retail betting shops multiplied, whereas earnings online fell by 8%.
Scholar pointed out that "the emergence from covid and the resumption of economic normalcy weighed on online sales with customers spending less time glued to their devices."
Aarin Chiekrie at Hargreaves Lansdown agreed: "It's no surprise to see to see annual growth heavily biased towards the retail division, as last year’s comparative period laps times when shops were shut due to lockdowns."
Increasing regulatory pressures are also weighing on the company. Lara Martinez, at Third Bridge, noted "rising player protection measures in Europe are not going to help" while the company itself highlighted regulatory headwinds.
Analysts at Shore Capital highlighted regulatory changes in Germany, and the Netherlands plus player safety measures in the UK as particular headwinds for the firm.
Another headache could come in the publication of a UK White Paper on the gambling industry which could be published before Easter according to a recent report in The Guardian.
Scholar said that Entain is "having to absorb significant changes to regulation in its major markets."
A brighter spot was the US where the joint venture with MGM continues to perform well.
Chiekrie said BetMGM "continues to shine bright – giving Entain some healthy exposure to the US market."
Despite MGM's chief executive quashing rumours that it could bid for Entain, Chiekrie "wouldn’t rule out a takeover bid in years to come."
Analysts at Shore Capital think the US business is heavily discounted when the valuation of Entain is considered. It sees fair value for the shares closer to 1,800 pence and has a 'buy' rating on the stock.
By Jeremy Cutler, Alliance News reporter
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