Source: Sharecast
Canaccord Genuity stated that with 888's acquisition of William Hill now completed, it had updated its forecasts to formally reflect the enlarged group and the move to reporting in GBP.
"We reduce our SOTP-derived target price to 470p (from 690p) reflecting updated GBP forecasts and slightly moderated component multiples (10x online vs 12x previously) given the compression in sector multiples over the past 9 months, but significant upside remains," said Canaccord.
"Whilst market conditions have changed materially since the initial deal announcement back in September and financing costs have also increased, we believe the strategic rationale for the combination remains compelling and positions the enlarged group strongly both from a scale perspective and a product and geographic mix perspective."
The Canadian bank, which reiterated its 'buy' rating on the stock, said 888's "expanded and strengthened management team" can now begin the work to integrate the two businesses and deliver the planned £100.0m of synergies previously outlined.
However, Canaccord also noted that the industry continues to await the UK Gambling Act White Paper, which it said remains "a key risk factor" in the near term. It also cautioned that recent events in Westminster may delay publication further.
But the analysts also said if press reports from recent weeks were to be believed there should not be any surprises in the review that both 888 and William Hill had not already "extensively prepared for".
Reporting by Iain Gilbert at Sharecast.com
