Broker tips: Entain, Celtic

(Sharecast News) - Berenberg slightly raised its target price on bookmaker Entain from 1,010.0p to 1,035.0p on Tuesday, stating it was "continuing to bet" on the BetMGM turnaround. Berenberg said Entain was "a top pick" in the leisure space, with the group's recent update from its BetMGM joint venture on 4 February further reaffirming its positive view on the company.

"The US business has turned a corner, stabilising its market share and reaffirming its longer-term guidance of $500.0m of EBITDA," noted Berenberg. "Additional disclosure provided in this update leaves us impressed with the FY24 performance and confident for the year ahead."

The German bank, which has a 'buy' rating on the stock, continues to think that the BetMGM business has been undervalued in Entain's current share price, which it reckons should drive a re-rating this year as the market grows in confidence in BetMGM's outlook.

"We value Entain using a SOTP model and include a value for the BetMGM joint venture. This yields a value per share of 1,035.0p comprised of 620.0p for the ex-US business and 415.0p for the US business. On multiples, Entain trades on 19.4x FY25 EPS estimates, but this falls rapidly to sub-12x in FY26 as both the ex-US and US businesses deliver strong EBITDA growth," concluded Berenberg.

Analysts at Canaccord Genuity slightly raised their target price on Celtic from 202.0p to 208.0p on Tuesday, stating the firm's improved UCL campaign drives FY25 upgrades.

Canaccord Genuity said Celtic has continued to make strong progress across the first half of FY25, with a "strong start" to the 2024/25 league season being complemented by the winning of the Scottish League Cup and a successful UCL League stage campaign.

"After two years of disappointing UCL Group stage campaigns, the Club has seen a marked improvement in Europe's elite club competition and has successfully qualified for the knock-out stages of the competition for the first time since 2013," said Canaccord. "We believe the Club remains well positioned for further success this season, with a commanding lead in the SPFL after winning a third successive league title in 2023/24, making it 12 titles out of the previous 13."

The Canadian bank also noted that the change to the UCL format, with games now played in the Club's second half, and a change in the composition of home matches played, have resulted in a small re-profiling of group revenues into H225, whilst higher wages and stadium investment has seen reduced H125 profit pre-player trading.

"We have increased our FY25E forecasts to reflect the improved UCL campaign, albeit the full FY25 outcome clearly remains contingent on results across the remainder of the season," concluded the analysts, who reiterated their 'buy' rating on the stock.