Canaccord downgrades William Hill to 'sell'

Analysts at Canaccord Genuity downgraded bookmaker William Hill to 'sell' from 'hold' on Thursday, stating execution risks still remained despite the group's £224m placing "significantly" repairing its balance sheet.

Canaccord said the gross proceeds of William Hill's placing, combined with a roughly £200m VAT refund, should significantly de-risk the group's balance sheet and leave it no longer over-leveraged.

However, the Canadian broker stated that with the group upping its US investment, execution risk had increased in a "crowded and well-funded marketplace" and added that further UK regulatory risk had also increased with a report from the All Party Parliamentary Group for Gambling Related Harm recommending the banning of betting in-play and reiterated its call for a £2 maximum online stake.

Canaccord said that on its revised forecasts, William Hill's stock trades on a full-year 2021 price-to-earnings ratio of 18.9x and a lease-adjusted enterprise value/earnings before interest, tax, depreciation and amortisation of 7.0x.

"This appears too expensive to us given the risk profile," said the analysts, which did maintain their 110.0p target price on the group's shares.