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Jun 8 2018, 12:20 IST/BST
We update our forecasts for the regulatory and tax developments announced in the UK and Australia over the last month. Our revised figures reflect the Q1 trading update in early May as well as the cash flow implications of both the FanDuel acquisition and the commenced share buy-back programme. Our new estimates imply that, absent US sports betting or further M&A, the group is unlikely to materially grow earnings between 2017 and 2020, with gaming taxes and regulatory changes offsetting underlying EBITDA growth of 6% per annum. By any historic measure, the group’s valuation now looks expensive (15.6x 2019 EBITDA, 21.1x 2019 P/E) but this obviously excludes the value of the US option. What that option is worth depends entirely on shareholders’ investment time horizon.