William Hill (trading update 20 November)
Recent broker upgrades have lifted William Hill, with the positive commentary coming even as the government consultation on fixed-odds betting terminals (FOBTs) looms over the sector. Bank of America Merrill Lynch said recently that it does not expect a £2 cap on FOBTs, with a £20 cap being more likely. Even on a £2 cap, the firm would trade at just over 12 times forward earning, compared to a five-year average of 12. A possible liberalisation of the US market could provide significant upside, although it is unlikely that the topic will come up in the trading statement.
The recent bounce has carried the shares back to the 284p high from the beginning of August. A close above here would bring the May peak at 308.5p back into frame. However, a close above here is required to cancel out the sequence of lower highs seen since mid-2016. Significant support comes from 235.7p, having stemmed the downside since June last year.