DAVY VIEW

In this report, we update on Entain (ENT) to reflect a very busy period of newsflow. The investment case comprises pros and cons. Fundamentally, performance was poor in FY23 with the ENT online business losing share in a number of markets, and management is guiding to negative underlying growth in H124. Interest cover and leverage are also a concern in a sector prone to regulatory shocks. BetMGM lost market share during the year and profitability expectations have changed substantially. However, there are a few areas where one can be more constructive: (i) online forecasts for FY24 look to be rebased to a level whereby it should at least be able to meet expectations; (ii) new management should trigger a renewed focus on execution; and (iii) the Board will likely be bolstered by investor representation, which in turn should lead to a fresh emphasis on shareholder value creation.