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Investing.com -- Entain plc (LON:ENT) shares plunged more than 10% after the company announced the sudden departure of CEO Gavin Isaacs, who is stepping down with immediate effect "by mutual agreement" after just five months in the role.
The company did not provide a reason for his exit. Stella David, currently the company’s non-executive Chair, will take over as interim CEO, a position she previously held from December 2023 until September 2024 before Isaacs’ appointment.
The abrupt leadership change has raised concerns among investors, with analysts at Barclays (LON:BARC) warning that the uncertainty could weigh on sentiment at a time when the company is in the midst of a critical turnaround.
Morgan Stanley (NYSE:MS) analysts echoed these concerns, noting that Isaacs had not yet outlined a strategic vision, which was expected to be a key focus at the FY24 results announcement on March 6.
The departure will further delay the articulation of a broader strategy, but Entain has reiterated that it expects FY24 EBITDA to be at the top of its £1,040-1,090m guidance range and remains comfortable with FY25 market expectations.
Investor confidence had been gradually improving following early signs of a recovery in the company’s online division and a positive update on BetMGM. However, today’s announcement threatens to disrupt that momentum.
The company is still dealing with the fallout from a hefty HMRC fine, and analysts highlight that reducing leverage remains a key challenge.
Free cash flow is expected to remain tight over the next three years, at approximately 15-25% of EBITDA, making stability at the top even more critical.
Barclays analysts noted that while David’s familiarity with Entain’s operational strategy should help maintain continuity, Isaacs’ departure after such a short tenure raises questions about the company’s long-term direction.
Meanwhile, Morgan Stanley pointed out that despite the leadership turmoil, Entain’s low valuation could provide some support to the stock.