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The Entain (LSE: ENT) share price has caught my eye over the last year, and today (16 June) it’s hard to ignore. The FTSE 100 gambling and sports betting group has surged more than 14% to 857p per share after a bullish update.
Today’s jump was driven by US optimism. Entain raised its revenue forecast for BetMGM, its 50:50 joint venture with MGM Resorts. Net revenues are now expected to hit “at least $2.6bn” this year, up from earlier guidance of $2.4bn-$2.5bn. That follows a strong second quarter, with growth across both iGaming and online sports betting.
BetMGM is winning
The board now expects BetMGM to deliver EBITDA earnings of “at least $100m” in 2025, compared to previous hopes of simply breaking even.
Management said the division’s improved focus, ongoing momentum and revised strategy reinforces its path to $500m in EBITDA over the next few years. So it’s feeling confident.
I’m not the only one taking a fresh look. On 13 May, broker UBS raised its recommendation to Buy and lifted its target price from 820p to 920p. It pointed out that while Entain has been steadily improving operationally, the shares hadn’t responded.
UBS flagged a 9% free cash flow yield forecast for 2026 and said the group trades at a 20% discount to rivals, while still offering the highest earnings growth versus valuation.
I was excited at the time, writing: “Entain is leading the charge as UK equities recover from Donald Trump’s tariff turmoil, its shares jumping 35% in a month.” So why didn’t I dive in then?
Recovery play?
This is a controversial sector. It’s prone to regulatory shocks, and Entain’s been caught out before. In Australia, its local arm has been accused of handling £72m in bets from customers with alleged criminal links.
This isn’t a one-off. It 2023, it agreed a £585m settlement following a bribery probe at its former Turkish business.
There’s also a wider political risk. In March 2024, it issued a profit warning after tighter UK and Dutch gambling rules threatened to knock £40m off profits. One idea floated for Rachel Reeves’ autumn Budget is a higher tax on gambling. That won’t be the last of it, in the UK or elsewhere.
Despite the recent wobble, I worked out late this morning that the shares still traded at a lofty price-to-earnings (P/E) ratio of 25 . But with the shares up 27% in a year, maybe that was to be expected. However, the shares rose a bit more after I worked that out so the P/E is becoming even steeper.
This stock makes me nervous. The valuation looks high and the sector carries baggage. But others might consider buying, especially with momentum returning.
Analyst forecasts remain strong. The median 12-month price target from 16 analysts is 956p – a fair bit higher than today’s levels. Of 17 analysts covering the stock, 12 name it a Strong Buy and the rest say Hold. That’s a vote of confidence. None says Sell.
There’s a 2.2% trailing yield too. The 2024 dividend was hiked 4.5% to 18.6p, so there’s progression. For the right investor, this could still be a calculated punt worth researching. Not for me though.
