Berenberg upgrades William Hill to 'buy', says firm ripe for a takeover
William Hill
271.80p
09:58 22/04/21
Analysts at Berenberg upgraded their recommendation for William Hill's shares from 'hold' to 'buy', arguing that the shares were just "too cheap" after having nearly halved in value over the course of 2018.
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So much so that they judged that it was now "ripe to be a takeover target".
Even so, there were multiple potential vulnerablities in the spreadbetter's financial profile that needed to be monitored, including the return to growth of its UK retail business as a result of the upcoming regulatory hurdles, the integration of Mr.Green and the evolution of the regulatory environment in the States.
"Despite capillary presence there, we are still unsure as to whether WMH’s strategy to address sportsbetting with its own brands is the correct one," they added.
Their estimates for the company were below consensus for 2019-2020 on the expectation of higher start-up losses in the States.
But even factoring in a 30% recession risk, the resulting valuation for the stock was 250p per share.
"We think that the stock has significant upside potential, barring any additional negative news. We also think that WMH is now ripe to be a takeover target.
"Despite significant upside potential, as well as upgrade to Buy, we would still much prefer GVC as a solid story of delivery, growth and US opportunity."