Entain, a company that faced pressure from activist investors late last year due to a declining share price trend and the unexpected departure of its CEO, Jette Nygaard-Andersen, is now dealing with a reduced price target from Barclays. The financial institution downgraded the company from “overweight” to “equalweight” and lowered its price target from 1,120p to 1,070p, citing the company’s challenging path to recovery. Barclays highlighted the need for Entain’s online platform to return to market growth rates and for US market share to stabilize or grow, noting that neither outcome is guaranteed.
Barclays also raised concerns about Entain’s limited free cash flow and high leverage, which restricts the company’s options for mergers and acquisitions. Despite acknowledging that the stock appears cheap, Barclays believes the risk-reward is balanced and downgraded its rating to “EW”. However, the financial institution recognized the importance of appointing a new CEO, stating that a new executive could potentially address the company’s balance sheet and resolve various issues and concerns.
Recent reports indicate that Entain is continuing its management reshuffle, with operations director Peter Marcus reportedly set to leave the company at the end of June after an eight-year tenure. In addition to these management changes, Entain confirmed its withdrawal from over 140 unregulated gambling markets, including territories such as Antarctica and Vatican City, as well as jurisdictions with populations of less than 1,000 people like the Pitcairn Islands, United States Minor Outlying Islands, and the French Southern and Antarctic Lands.
These developments highlight the ongoing challenges faced by Entain as it navigates a changing leadership team, financial pressures, and strategic shifts in its global operations.