Broker tips: 888, Haleon
Analysts at Deutsche Bank slashed their target price for shares of 888 following the company's first set of results following completion of the acquisition of William Hill.
Proforma revenue growth did move back into the black, they said, but to just 1%, and they were anticipating a 5% reduction to management's forecasts for full-year 2022 earnings before interest, taxes, depreciation and amortisation.
They also highlighted the combination of balance sheet, execution and regulatory risks inherent in the company.
All told, they lowered their target price from 350.0p to 296.0p.
Nevertheless, their recommendation remained at 'buy' as the discount in terms of the shares' enterprise value to EBITDA looked "excessive".
Furthermore, they spied "material" upside potential to the synergies obtained through the merger, arguing that they could more than offset the hit from the UK's regulatory white paper.
RBC Capital Markets initiated coverage of GlaxoSmithKline’s consumer health spinoff Haleon on Tuesday at ‘sector perform’ with a 300p price target.
"We were leaning towards initiating at ‘outperform’, but on reflection Haleon's competitive position is less exciting than we had imagined," it said.
"Haleon has an adequate collection of brands and market positions which should enable the group to grow organic sales at the low end of its 4-6% guidance."
RBC said potential litigation liability over heartburn drug Zantac will act as a turnoff for staples investors, as will the overhang from Pfizer's and GlaxoSmithKline’s 32% and 5.4% shareholdings.