DAVY VIEW

Entain updated this morning on the outcome of a strategic review by the Board’s Capital Allocation Committee (CapCo). The key outcomes were (1) it believes it has the appropriate portfolio of assets, brands and capabilities to deliver long-term growth with the exception of Crystalbet in Georgia and (2) returning to organic revenue growth and expanding margins can deliver significant upside. Trade press had speculated that certain investors were previously in favour of asset disposals. The outcome of the Committee in the main suggests that the vast majority of its portfolio remains core. It also indicates that the Committee (which includes Eminence CEO Ricky Sandler) has confidence in returning to growth. Entain’s share price is down 25% year-to-date; key to a recovery in valuation is a return to growth in the core Online business and market share stabilisation and recovery in BetMGM. Leverage remains high (3.6x including the HMRC fine), so focus on the delivery of these metrics will be elevated.