Deutsche Bank cuts price targets for Flutter, GVC and William Hill
Deutsche Bank cut its price targets for Flutter, GVC and William Hill to take account of the wave of cancelled sporting events caused by the Covid-19 crisis.
Simon Davies, Deutsche's analyst, reduced earnings forecasts for the three sports-based online gaming companies by between 30% and 54%. William Hill was the worst affected because of its reliance on sports betting and retail stores, which have been closed in the UK.
The Covid-19 crisis has caused the cancellation of sports events including the Grand National, the Euro 2020 football championships and the Australian Grand Prix. The Tokyo Olympics were postponed until 2021 on Tuesday.
Deutsche reduced its price target for Paddy Power owner Flutter to £75 from £85 with a 'hold' rating. For GVC, which owns Ladbrokes, Davies reduced his target to 900p from £11.25 with a 'buy' rating.
William Hill was the biggest casualty of Davies's reductions. He cut his price target to 120p from 205p with a 'hold' rating.
"The online gaming sector has been hit hard by an unprecedented number of sporting event cancellations around the world," Davies wrote. "The impact on the sports betting oriented online gaming sector will be extremely high. We see a significant recovery once sporting events resume and retail stores reopen."