Entain Plc (OTC: GMVHY), which has seen its market value slump considerably this year, has at least two paths to consider to reverse course.

That’s the take of Susquehanna analyst Joseph Stauff, who initiated coverage of the Ladbrokes owner today with a “positive” rating and a price target that implies upside of 17% from current levels. Among the “two independent and attractive paths for the stock,” Stauff noted a renewed emphasis on organic growth outside the US, which could be one avenue to consider.

Entain’s US exposure comes from its 50% stake in BetMGM. Outside the US, the operator has used acquisitions, including some criticized by investors, to bolster top-line growth.

While the Coral operator has signaled it plans to remain acquisitive, a renewed emphasis on organic growth and gaining market share outside the US without deal-making could be to the delight of investors.

In late September, Entain shares tumbled after the company issued a disappointing 2023 net gaming revenue (NGR) forecast, citing softness in online gaming. It also mentioned slack growth in Australia and Italy.

BetMGM Deal Could Help Entain, Too

The other avenue through which Entain could potentially restore investor confidence and boost growth is some form of compromise with BetMGM.

(That would) release its inflexible operating structure that we think needs to occur in the near-term before risking a more permanent step-function decrease in market share,” Stauff noted.

The Susquehanna analyst didn’t detail what form such a compromise would take. One idea would be for Entain to simply sell its half ownership in BetMGM to partner with MGM Resorts International (NYSE: MGM). Such a transaction would likely generate a hefty payday for the seller, and MGM has made clear it would like to control all of the iGaming and online sportsbook operators.

At the Global Gaming Expo (G2E) in Las Vegas last month, Entain CEO Jette Nygaard-Andersen told attendees that joint ventures don’t last forever, implying a time will come when BetMGM’s ownership looks materially different than it does today.

Entain Sale a Stretch, But…

With its shares down 31.20% year-to-date, Entain’s market capitalization has slumped to $7.22 billion. That’s well below the $11.06 billion MGM offered in January 2021 to acquire the company and a fraction of the more than $20 billion DraftKings (NASDAQ: DKNG) offered later that year.

Over the nearly three subsequent years, Entain has frequently been mentioned as a potential takeover target, and analysts haven’t shied away from such speculation. Those rumors could intensify because, with the aforementioned market cap of $7.22 billion, Entain is approachable to any number of prospective suitors.

However, Nygaard-Andersen hasn’t signaled that she’s interested in selling the company and the recent acquisition binge frames Entain as more buyer than seller.

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