Investec downgrades William Hill as it highlights weak football results

Investec downgraded William Hill to ‘sell’ from ‘add’ and cut the price target to 323p from 333p following recent share price strength.

The brokerage trimmed its full year 2015 earnings before interest and taxes and earnings per share estimates by 1.4% and 1.6% respectively, to reflect adverse football results, customer transition and aggressive customer acquisition activity by two of the other major operators.

Investec said the third point mentioned above poses a competitive threat to William Hill.

Investec cut its FY15E gross win margin in both retail and online, from 17.6% and 7.6%, to 17.5% and 7.4% respectively, to reflect weaker football results, as seen in Gala Coral’s current trading to 30 November.

It also lowered its FY15E online sportsbetting wagering growth from 6% to 4%.

It added that William Hill’s new customer promotions in online sportsbetting appear relatively less attractive than those of the other big six operators in the UK.

The brokerage also said the number of customers who visited Williamhill.com relative to its major peers is marginally lower than six months ago, showing a loss in brand presence and relatively weaker promotions.

At 0940 GMT, William Hill shares were down 1.2% to 370.20p.