Entain gets target hike from Deutsche Bank after US update

Deutsche Bank raised its target price for Entain PLC to 1122p from 958p, reiterating a 'buy' rating, following a strong trading update from its US joint venture BetMGM. The update revealed 34% revenue growth in Q1 2025 with similar growth expected in Q2, driven by both iGaming and sports betting, leading BetMGM to project full-year EBITDA of at least $100 million, a significant upgrade from previous expectations. The positive revision follows Citi's reiteration of its 'buy' rating and 1250p price target, driving Entain shares up 2.4% to 857.8p.

Analysis

Entain PLC has received a notable endorsement from Deutsche Bank, which increased its price target to 1122p from 958p and maintained a 'buy' rating, primarily driven by the robust performance of its US joint venture, BetMGM. This positive revision follows a similar 'buy' reiteration from Citi with a 1250p target. BetMGM reported a significant 34% revenue growth in Q1 2025, with management anticipating a comparable growth trajectory for Q2, supported by strong trading across both iGaming and sports betting segments. Crucially, this performance is not attributed to favorable luck alone, as sportsbook margins in Q2 have aligned with expectations, indicating a fundamental improvement after challenges from unfavorable sporting results in H2 2024. Consequently, BetMGM has substantially upgraded its full-year EBITDA guidance to at least $100 million, from a previous indication of merely being 'EBITDA positive'. This positive momentum has propelled Entain's shares up 2.4% to 857.8p, reaching approximately 15-month highs, signaling a potential turnaround and enhanced contribution from its US operations.

Key Decisions for Investors

• Investors should consider the heightened price targets and 'buy' ratings from Deutsche Bank and Citi, reflecting increased confidence in Entain's US strategy and BetMGM's earnings potential.
• Closely monitor subsequent BetMGM performance reports, specifically revenue growth consistency and the achievement of the upgraded $100 million EBITDA target, as these are critical validation points for the current optimism.
• While Entain's shares have reached 15-month highs, the new analyst targets suggest potential further upside, warranting a review of valuation in light of BetMGM's accelerated growth and profitability trajectory.