Leading bank bullish on Entain after BetMGM lifts 2025 outlook

Citi has reaffirmed its 'buy' rating for Entain PLC following BetMGM's revised 2025 outlook, projecting net revenue of at least $2.6 billion and EBITDA exceeding $100 million, significantly above previous estimates. This upgrade, driven by strong iGaming and sports betting performance, suggests BetMGM will achieve EBIT profitability in 2025, potentially boosting Entain's overall results; however, Entain's stock was down 2.2% to 847p in late afternoon trading as investors took profits.

Analysis

Citi has reiterated its 'buy' rating on Entain PLC, maintaining a £12.50 price target, following a significant upgrade to the 2025 outlook for BetMGM, its US joint venture with MGM Resorts. BetMGM now anticipates net revenue of at least $2.6 billion for 2025, an increase from the previous $2.4-$2.5 billion range, and forecasts EBITDA to exceed $100 million. This revised EBITDA projection is more than double the consensus estimate of $47.9 million and substantially above Citi's own $58.7 million projection, signaling a strong positive revision. The enhanced guidance is attributed to robust underlying performance in both iGaming and sports betting, underscored by second-quarter revenue growth to date being 'broadly consistent' with the first quarter's 34% year-on-year increase, which significantly surpassed Citi's Q2 growth forecast of 15%. This performance suggests BetMGM is on track for EBIT profitability in 2025, which would positively impact Entain's group results. Despite this bullish outlook and a 'strongly positive' sentiment signal, Entain's stock experienced a 2.2% decline to 847p, attributed to investors securing profits after recent share price gains. The upcoming first-half update for Entain on July 29th will be a key event for further details.

Key Decisions for Investors

• Investors should view the upgraded BetMGM guidance as a significant positive catalyst for Entain, reinforcing the fundamental underpinning of Citi's 'buy' rating and £12.50 price target.
• The recent dip in Entain's share price, reportedly due to profit-taking, may present a tactical entry point for investors aligning with the strong medium-term outlook, especially considering BetMGM's projected EBITDA significantly exceeds prior expectations.
• Monitor Entain's first-half results announcement on July 29th closely for confirmation of BetMGM's contribution and the overall group's performance trajectory.