Jefferies says William Hill could be worth as much as 460p, or 80p

Analysts at Jefferies laid out their scenario analysis for William Hill, the most 'bullish' of which could see the shares gain more than half in value to 460.0p.

Admittedly, their downside scenario could see them fall to just 80.0p.

The key to the bookie's success were its US operations, with Jefferies judging the firm to be "strategically well-positioned" to benefit from the multi-year, high growth opportunity in American sports betting and iGaming - which in turn merited a "premium" valuation.

"As more US states legalise, more quickly than we expected, the prize is substantial," the broker said.

"We estimate the US market will be worth some $19bn in net revenue by end 2023, equivalent to c$5bn EBITDA at maturity."

Jefferies's discounted cash flow estimate for William Hill yielded a 330.0p per share target price, assuming that only half of the US states actually legalised sports betting - a scenario the analysts themselves deemed "conservative".

If all States legalised then the target price would rise to 460.0p, they added.

Assume a market share equal to US rival DraftKings and that takes your implied valuation to 865.0p.

On the flip-side, if no bid were forthcoming and no material progress were made in the US, then the fair value estimate for the firm's shares would drop to 80.0p.

Not included in Jefferies's base case valuation was the opportunity in iGaming, although more states beyond New Jersey and Pennsylvania were expected to legalise it as they sought out tax revenues, nor a takeover premium to reflect its leading position.

"William Hill suffered material earning downgrades due to UK gaming machine regulation in 2019, with EBIT broadly halving. We are expecting a review of the 2005 Gambling Act in the UK to be announced in the next several weeks, focused on Online.

"We argue that any further regulation that potentially undermines online earnings would be outweighed by the re-rating upside from regulatory clarity."