Investec upgrades William Hill, sees potential for short-term rally

Investec upgraded William Hill to ‘add’ from ‘sell’ and lifted the price target to 404p from 346p.

The brokerage said it expects news of very strong current trading in the first seven weeks of this year with the preliminary figures due out on 26 February.

It argued that with full-year operating profit of around £290m pre-announced and no further updates to new sports-betting platform Project Trafalgar since the iOS transition, there was limited downside risk.

“William Hill is one-third of the way through Project Trafalgar. With limited recent Trafalgar updates and William Hill having ascertained the correct customer experience, we see risk related to Project Trafalgar as lower,” it said.

Investec, which sees the potential for a short-term rally in the stock, said upside could come via a share buyback or special dividend given the strong balance sheet, lack of recent M&A and guided FY15 net debt/EBITDA of 1.3x.

It said the target price uplift primarily reflects the reduced risk relating to Project Trafalgar and positive read-across from the rollout of self-service betting terminals by Ladbrokes.

At 1135 GMT, William Hill shares were up 1.6% to 395.40p.