The Tabcorp Holdings Limited (ASX: TAH) share price has continued its slide on Wednesday.
In morning trade, the wagering and media and gaming services company’s shares are down a further 7.5% to 97.5 cents.
This means the Tabcorp share price is now down 82% over the last couple of sessions.
What’s going on with the Tabcorp share price?
The weakness in the Tabcorp share price this week has been driven by the demerger of the company’s Lotteries and Keno businesses on Tuesday. These businesses have been spun off and listed separately as The Lottery Corporation Limited (ASX: TLC).
Given that this happened yesterday, investors may be wondering why its shares have continued to slide today.
This weakness appears to have been driven by investors trying to find a fair valuation for the Tabcorp business now that its more attractive Lotteries and Keno businesses have been taken away.
What is new Tabcorp worth?
According to a note out of Credit Suisse, it believes that fair value for the Tabcorp share price is notably higher than where it trades today.
The note reveals that its analysts have slapped an outperform rating and $1.25 price target on the company’s shares.
However, analysts at Macquarie Group Ltd (ASX: MQG) are feeling a little less positive. They have put a neutral rating and $1.00 price target on Tabcorp’s shares.
Macquarie prefers the spun off Lottery Corporation business and has an outperform rating and $5.00 price target on its shares. This is despite the broker acknowledging that demerged shares often underperform initially in Australia.
It commented: “When examining the behavior of stocks post the demerger implementation the child entity typically underperforms the market for the first six months. […] This has been longer and larger in more recent transactions. The short-term underperformance in the child is eventually reversed, with strong longer-term performance.”
The post Tabcorp share price slumps another 7% following demerger appeared first on The Motley Fool Australia.
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More reading
- Why Nufarm, Sayona Mining, Tabcorp, and TechnologyOne shares are falling
- Here are the 3 most traded ASX 200 shares on Tuesday
- Here’s what you need to know about the Tabcorp demerger
- The Lottery Corporation share price debuts on the ASX boards
- ASX 200 midday update: Nufarm, Tabcorp and TechnologyOne tumble
Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Macquarie Group Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
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