Source: Sharecast
Berenberg said Entain was "a top pick" in the leisure space, with the group's recent update from its BetMGM joint venture on 4 February further reaffirming its positive view on the company.
"The US business has turned a corner, stabilising its market share and reaffirming its longer-term guidance of $500.0m of EBITDA," noted Berenberg. "Additional disclosure provided in this update leaves us impressed with the FY24 performance and confident for the year ahead."
The German bank, which has a 'buy' rating on the stock, continues to think that the BetMGM business has been undervalued in Entain's current share price, which it reckons should drive a re-rating this year as the market grows in confidence in BetMGM's outlook.
"We value Entain using a SOTP model and include a value for the BetMGM joint venture. This yields a value per share of 1,035.0p comprised of 620.0p for the ex-US business and 415.0p for the US business. On multiples, Entain trades on 19.4x FY25 EPS estimates, but this falls rapidly to sub-12x in FY26 as both the ex-US and US businesses deliver strong EBITDA growth," concluded Berenberg.
Reporting by Iain Gilbert at Sharecast.com