Shares in William Hill (WMH) fall 3% to 284.7p after Investec cuts its recommendation from ‘add’ to ‘reduce’, warning of a bleak outlook for the UK bookmaker.

The £2.6 billion cap issued a profit warning in March following the introduction of automatic self-exclusion legislation, which requires gambling companies to let punters restrict themselves from placing bets.

Analyst Alistair Ross reckons that if the levels of automatic self-exclusions don’t subside it could also hit results in 2017, costing William Hill between £24.1 million and £36.3 million at the EBIT (earnings before interest and tax) level.

WILLIAM HILL - Comparison Line Chart (Rebased to first)

The group has also suffered problems with migrating players to its new sports betting platform, Project Trafalgar. It has yet to transition desktop customers – a risk that Investec says should not be ignored. Between 55% and 60% of sportsbook revenue is generated via desktop.

The majority of William Hill’s executive team members have been replaced since James Henderson took over the reins as chief executive in 2014.

‘Arguably, too much change in management brings upheaval and may distract from the day-to-day running of the business,’ Ross warns.

On top of this, William Hill – like other gambling companies – faces the risk of further regulation and taxes.

Shares in the bookie are down 29% so far this year and a reversal in fortunes doesn’t seem likely any time soon. Investec has lowered its target price from 404p to 286p, just 0.5% higher than the current share price.

Issue Date: 16 Jun 2016