William Hill shares fall as Canaccord cuts target price, earnings forecasts

William Hill’s shares fell on Friday as Canaccord Genuity reiterated a ‘hold’ rating and cut its target price to 301p from 340p.

The betting group has warned about poor results from horse racing at Cheltenham, tighter regulation, and teething problems with its strategy of taking more technology in-house, Canaccord noted.

In March, William Hill said it expected operating profit for this year to fall to between £260m and £280m, from £291m last year.

“And now the Brexit vote looks likely to have some impact on consumer confidence, driving further downgrades in Retail,” said Canaccord’s Simon Davies.

Davies said William Hill’s retail offer has improved while the UEFA Euro 2016 will give first half profits a boost. However, he said the technology challenges in its online offering and poor summer weather will not have helped.

“…Online should remain relatively resilient (if it can resolve ongoing technology challenges), but while Australia will benefit from the weaker pound, it faces its own intensifying regulatory challenges which continue to dampen growth. Overall, it looks set for a second consecutive year of double-digit Earnings declines.”

Canaccord has reduced its 2016 earnings before interest, tax, appreciation and amortisation (EBITDA) forecast from £272.3m to £259.6m, driving pre-tax profit down from £236.2m to £223.4m and earnings per share (EPS) down to 22.5p from 21.3p,

The 2017 estimate for pre-tax profit and EPS was also cut to £233.4m from £249.6m and 23.2p from 24.8p.

“It reports interim results on 5 August, and we project flat revenues (£803.1m) and EBITA down 19% to £125.4m,” Davies said.

Shares fell 1.48% to 267p at 1315 BST.