- Strong Q2 trading continued into second half
- UK digital returns to growth earlier than expected
- New CEO Gavin Isaacs stated on 2 September 2024
Gambling and sports betting group Entain (ENT) jumped 9% to top the FTSE on Monday after the Ladbrokes and Foxy Bingo owner said improved second quarter trading momentum has continued into the second half.
The embattled company has been under pressure from activist investors to improve performance after seeing its shares drop more than 40% over the last 12-months.
The shares picked up after the company announced the appointment of industry veteran Gavin Isaacs as CEO in July having rallied 23% over the last month.
WHAT DID THE COMPANY SAY?
The company said online net gaming revenue growth has been ahead of expectations since the end of June with UK and Ireland online returning to year-on-year growth earlier than expected.
International businesses and central and eastern Europe continue to perform well while retail across the regions were said to be in line with expectations.
The firm also pointed to further progress in the key US market ahead of NFL season kicking off. It’s 50/50 joint venture partner BetMGM is the first app to offer Nevada bettors seamless, nationwide connectivity through a single, digital wallet.
EXPERT VIEWS
Shore Capital’s leisure analyst Greg Johnson was encouraged by the update, saying: ‘That the UK has turned positive at this early stage suggests upside risk to full year revenue guidance, although we suspect any material outperformance in revenues will be likely be reinvested back into the business.’
‘A return to growth in the UK would also go a long way to meeting the medium-term assumptions for annual digital revenue growth of 6% to 8%; which we estimate from full year 2025’, added Johnson.
Investment director Russ Mould at AJ Bell commented: ‘Gavin Isaacs has only been chief executive of gambling group Entain for a week and he’s already managed to issue a trading update that’s put a rocket underneath the share price.
‘Entain has had a problematic few years, dealing with a bribery investigation and allegations that it overpaid for acquisitions which haven’t lived up to expectations.
‘The business has been circled by activist investors hoping to push through change and score an easy win, particularly as the share price had fallen by 75% between September 2021 and August 2024.
‘So much bad news has been priced into the company’s valuation that it might only take the smallest bit of positivity to drive a recovery rally, just as we’re seeing from the latest trading update.’
Disclaimer: Financial services company AJ Bell referenced in the article owns Shares magazine. The author of the article (Martin Gamble) and the editor (Steven Frazer) own shares in AJ Bell.
