Goldman Sachs has downgraded Entain to sell from buy saying that the company has been having problems with growth due to a combination of regulatory headwinds, competition, market dynamics, and regulatory headwinds.

The firm lowered its price target to 820p from 1450p (~4% downside based on Monday’s close on the London Stock Exchange).

Analyst Ben Andrews noted that Entain has a joint venture with BetMGM losing market share as well as a larger-than-expected £585M HMRC settlement. “We now expect Entain’s pro-forma Online growth to be negative in 4Q23 and 1H24, only returning to positive growth in 2H24,” he wrote.

Andrews added he is cutting his fiscal 2024 and 2025 EPS estimates by ~30%. He noted that the company’s free cash flow has also significantly deteriorated