Shares of Entain surge following analyst discussions on fresh strategic plans

Entain Plc, the global online betting and gaming group, has been making headlines this week as its shares rose significantly. The company, which is backed by investors such as Eminence Capital and Corvex Management, became the best-performing stock on the FTSE 100 on Friday, with a 2.6% increase in London.

The surge in Entain's shares has sparked a flurry of activity in the market, with many believing that MGM Resorts may be interested in acquiring Entain's stake in their joint venture, BetMGM. This speculation is further fuelled by the fact that Keith Meister, who leads Corvex, also serves on MGM's board.

Jefferies, a leading global investment bank, issued an optimistic report on Entain Plc, highlighting the company's consistent earnings and substantial investments in technology. James Wheatcroft, an analyst at Jefferies, praised Entain's technology, stating that it is now solid enough to handle different business areas, such as BetMGM.

Wheatcroft also suggested that listing BetMGM on its own in the US or making a deal that utilises Entain's tech platform could increase competition around the company's value. In line with this, he increased Entain Plc's price target to GBP 12 ($16.20).

However, the pressure on Entain is not just from potential suitors. Activist pressure is increasing, with investors pushing for the company to consider selling off more parts of its business beyond BetMGM. The speculation that Entain might sell its Australian operations arose in 2023, with a potential sale bringing in about $890 million. Interestingly, Betr, a competitor, has been rumoured to be interested in buying Entain's Australian operations.

The sale of Entain's Australian operations could significantly impact how the market values the company. As of now, the median price target for Entain's stock, based on LSEG data, is set at GBP 11.11 ($15). Out of the 21 analysts who track Entain, 14 have rated the stock as a "buy" or better.

With the next decision of Entain potentially shaping the company's future, investors and market analysts are eagerly waiting to see what moves the company will make. The US ventures of Entain are gaining momentum, and it will be interesting to see how these developments unfold in the coming months.