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The company has guided that earnings will be at the top end of prior guidance

GVC (GVC) 895.6p

Gain to Date: 7.5%

Original entry point: Buy at 833p, 17 October 2019

Ladbrokes and Coral Sports owner GVC (GVC) released a post close trading update on 17 January, guiding for full-year earnings before interest, tax, depreciation and amortisation (EBITDA) to be towards the top of the already upgraded third-quarter range of £670m to £680m.

Strong online constant currency revenue growth of 14% and not as bad as feared like-for-like declines in its high street shops (-12%) are the key drivers behind the current buoyancy of the business.

The company also noted that it is seeing good progress in the US, with an exclusive multi-year deal with Yahoo Sports representing a ‘significant step forward’.

Consensus earnings estimates have moved up around 10% since GVC initially upgraded its expectations back in the summer while the shares have risen 45% over the last six months.

However, an already frosty regulatory backdrop cooled further on 14 January when the gambling commission banned the use of credit cards for betting.

SHARES SAYS: The direction of travel for regulation has been clear for some time, but so far GVC has made the necessary operational changes to successfully overcome all obstacles.

Weighing up the threats against significant US opportunities, we are minded to stick with our ‘buy’ rating.

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