Berenberg lowers target price on 888 Holdings

Berenberg said 888 Holdings underwent "a difficult year" in 2022, weighed down by weakness in the UK, heightened interest rate costs, and high leverage following the completion of its William Hill acquisition.

The German bank highlighted that interest costs continued to weigh on the group, and with deleveraging ranking among management's main priorities, said 888 faces "an opportunity cost of potential growth" while refocusing itself on fewer markets.

The equity story revolves around the execution of deleveraging, with the current pro-forma leverage of 5.5x targeted to decline below 3.5x by FY25," said Berenberg, which reiterated its 'buy' rating on the stock.

"Despite the impending departure of the CFO Yariv Dafna, at the current valuation (6x our FY23 EBITDA estimate) the risk-reward is favourable in our view."

Reporting by Iain Gilbert at Sharecast.com