Deutsche Bank predicts positive H1 for GVC as EBITDA forecast rises
London-listed operator’s online gaming prowess to offset retail closures, according to analysts
Deutsche Bank is predicting a positive update from GVC as the operator prepares to announce its H1 2020 results and ease investor fears over the financial impact of the coronavirus pandemic.
While the closure of retail is set to impact the business, Deutsche Bank analyst Simon Davies predicts the strength of online gaming and resilience of sports betting will set the London-listed heavyweight in good stead.
Overall H1 revenue is expected to fall by 12% to £1.59bn, but online gaming – from which GVC generates around 57% of total revenue – is expected to show a double-digit (14%) organic growth to £1.19bn.
UK retail revenue is predicted to plummet by 53% as a result of the near three months of closures.
Deutsche Bank expects a H1 EBITDA of £307m, against the original FY20 total EBITDA of £652m. As a result, the firm has upped its EBITDA forecast for FY20 by 8% to £703.1m.
Alongside a change in predicted EBITDA, Deutsche Bank has upgraded its FY20 revenue from £3.17bn to £3.39bn and a drive down in debt from £2.05bn to £1.82bn, thanks in part to the £200m VAT repayment owed to the company.
Davies said: “Like the rest of the industry, GVC produced some very cautious base assumptions when guiding to the potential impact of the pandemic in mid-March, assuming no meaningful resumption of sport until August.
“We see some pressures on retail from the material reduction in high street footfall, but we expect this will be materially offset by the stronger momentum in online,” he added.