888 shares rise amid upbeat news
2023.01.16 08:29
888 shares rise amid upbeat news
By Tiffany Smith
Budrigannews.com – 888 Holdings (LON) shares jumped on Monday after Peel Hunt analysts supported their optimistic outlook for the online gambling company, reversing some losses at the end of the previous trading week.
Analysts stated that they still have faith that 888’s acquisition of William Hill’s business outside of the United States in a £1.95 billion (£1 = $1.2220) deal in July will be “executed well” and lead to a “bounce back” in stock prices.
Over the past year, investors have worried about how the massive debt pile that 888 accumulated in order to finance the purchase of William Hill will be affected by recent interest rate hikes by the central bank. As a result, shares of the Gibraltar-based 888 have dropped by approximately 65 percent.
Potential shareholders are likely to remain “on the sidelines” until the acquisition shows signs of success, according to Peel Hunt analysts. The acquisition has saddled 888 with “too much debt at too high a price.”
888 presented plans in November to reduce the £1.6 billion in debt it took on during the transaction, primarily through disciplined capital allocation. However, 888 acknowledged that it is still susceptible to rising borrowing costs, with 64 percent of its net debt at the end of September tied to floating rates.
Shares were also hurt last week when 888 said that chief financial officer Yariv Dafna would be leaving at the end of March. Dafna was said to have played a “crucial role” in the William Hill merger. Dafna’s departure was referred to by the company as a “mutual” choice.
In the meantime, sales fell by 3% in the year to the end of December despite a spike in revenues caused by the FIFA World Cup football tournament at the end of 2022.
However, fourth-quarter revenue exceeded consensus estimates, and 888 maintained its full-year guidance.
