Goldman Sachs Issues Caution on Entain as online gambling outlook raises questions
Investment bank and financial services giant Goldman Sachs has downgraded Entain to sell from buy amid concerns over business growth, particularly within its online division.
Goldman Sachs delivered a significant downgrade to its price forecast for betting group Entain, citing challenges to the company's online gambling operations and reduced growth expectations.
The investment bank slashed Entain's 12-month price target from 1450p to just 820p per share. This represents a 2.9% discount to Entain's closing price the previous day, and a further 1.7% decline from its closing price two days prior.
In its downgrade rationale, Goldman Sachs pointed to regulatory headwinds, rising competition, and unfavorable market dynamics that have hampered Entain's online division growth in recent months.
Specifically, the bank forecast negative online revenue growth for Entain in Q4 2023 and the first half of 2024. It does not expect a return to increasing online sales until the second half of next year at the earliest.
Goldman Sachs accompanying earnings forecasts for 2024 and 2025 were cut by approximately 30% compared to prior estimates, reflecting serious concerns about Entain's profitability. Free cash flow generation has also deteriorated, according to the investment analysis.
In sum, mounting challenges in Entain's core online gambling operations prompted Goldman's significantly bearish outlook and price target reduction for the high-profile betting group.
