Citigroup upgrades Ladbrokes, says shares have fallen far enough

Citigroup upgraded Ladbrokes to ‘neutral’ from ‘sell’ and raised its price target to 110p from 100p, saying the shares have now fallen far enough.

It said the new target price represents the mid-point between the upside potential it sees under a deal scenario and the downside risk under a no-deal scenario.

Citi estimated the share price upside potential from a merger with Gala Coral at around 30% and the downside risk if no deal emerged also at around 30%.

“The competition authority investigation will rumble on for several more months, dampening any need to take a strong view in the shorter term,” the analysts said.

Citi added that the two key catalysts that could drive a more positive view were trading updates citing an online pick-up, with a rise in active customers and net gaming revenues, and CMA deal clearance arriving earlier than the bank’s mid-2016 expectation.

At 1407 BST, Ladbroke shares were down 0.8% at 105.10p.