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Investing.com -- Goldman Sachs has upgraded Entain (LON:ENT) to "buy," citing improved risk/reward dynamics supported by momentum in both its online business and BetMGM joint venture in the U.S.
Shares of the Douglas-based company were up 3.5% at 05:21 ET (09:21 GMT).
The brokerage sees approximately 20% upside potential, with a bull-case scenario pointing to as much as 60%.
Entain, a gaming operator with a market cap of about $7 billion, owns brands such as Ladbrokes (LON:LCL) and Coral in the U.K. and holds a major stake in BetMGM in the U.S.
The company has delivered better-than-expected growth in its online segment for three consecutive quarters, a key factor behind the revised rating.
As per analysts, this consistent outperformance suggests that elements of the company’s digital turnaround are taking hold.
In addition to online recovery, the brokerage flags a strategic pivot at BetMGM and signs of stronger trading momentum.
Goldman Sachs also pointed to the resolution of previous overhangs, including the appointment of a permanent CEO, as reducing uncertainty around leadership and strategic direction. The analyst said these changes position the company to better focus on execution.
The brokerage forecasts double-digit upside to medium-term consensus EPS and sees a pathway for Entain to narrow the valuation gap between itself and industry peers.
Despite its recent rally, the stock remains at a material discount to peers and historical averages, according to the brokerage.