Analysts at Canaccord Genuity lowered their rating on Gamesys from ‘buy’ to ‘hold’ on Wednesday following the formal announcement of its proposed combination with Bally’s.
Canaccord pointed out that Gamesys and Bally’s formally announced proposed combination, following an initial announcement on 24 March, would combine Bally’s land-based casino and developing online operations in “the fast-growing US market” with Gamesys’ global online gaming offering and proprietary technology platform. T
The Canadian bank highlighted that the combination would be implemented by way of a court-sanctioned scheme of arrangement and while it awaits the outcome of the court meeting, it had chosen to lower its recommendation but increase its target price to 1878.0p from 1700.0p, in line with the 1850.0p offer price and the firm’s proposed final dividend of 28.0p for 2020.
“This represents a multiple of 10x our FY21 EBITDA forecast. Despite the offer being recommended by the Gamesys Board, the shares are currently trading at 1910.0p with the market perhaps hoping for a rival or improved offer,” said Canaccord.
The analysts also stated that alongside the offer announcement, Gamesys had announced that first-quarter trading had remained “strong”, with revenue growth of 27%, as trends seen across international markets were broadly consistent with those seen in the final quarter of 2020, with particularly strong growth seen in its core markets of the UK and Asia.
