The investment bank yesterday upgraded its target price from 135p to 150p, stating that it saw scope for improved future performance and corporate value, owing to what it deemed as a digital turnaround for the operator led by new CEO Jim Mullen.
The news will likely be welcomed by Ladbrokes’ new executive management team, as over the past two years the operator has seen 40% wiped off its share price value.
Morgan Stanley noted that “the worst may be behind” embattled Ladbrokes, who could become a good option for investors due to the company’s cheap valuation against its main market competitors, William Hill, Paddy Power and Betfair.
“With a fully operational new Digital business, and a refocused marketing plan, we see upside risks in the digital division, and expect the investor day on June 30 to highlight the scopefor the business in the coming years. We think there is also scope for cost savings in Retail, as well as some upside in the European division.”
In its latest financial update, Ladbrokes recorded n EBIT decrease of 22.3% to £14.3 million (Q1-2013: £18.3 million) as the operator was impacted by new POC charges and a set of customer friendly football results