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UK stocks have had a terrific year, with the FTSE 100 repeatedly breaking new highs. But not every company has joined in the fun. These two growth-focused stocks are down by a third. Is this a brilliant opportunity to consider them before they recover?
The first is financial data and trading specialist London Stock Exchange Group (LSE: LSEG). Its shares struggled last year, over concerns that artificial intelligence (AI) would erode its data business. Critics also argued it had been slow to roll out its own AI tools, despite its partnership with Microsoft.
London Stock Exchange Group shares slump
This month, AI fears returned with force. Virtually every FTSE 100 financial data stock slid as investors worried that advanced tools from firms such as Anthropic could disrupt their business models. LSEG was one of them.
Its share price has plunged 18% over the last month and is down 37% over the year. It’s now bouncing around as markets debate whether the sell-off has gone too far.
The stock got a brief lift Wednesday (11 February) on reports that activist hedge fund Elliott Management had built a stake and may push for a multi-billion-pound share buyback and tighter margins. Consensus forecasts are now supremely bullish, suggesting 63% upside from here. But I don’t fully trust them. Many of the 17 analysts will have set their targets before the latest bout of turmoil.
The P/E has fallen into the 20s, which is more reasonable. If the AI panic passes, this could have proven a brilliant buying opportunity but as AI menaces it feels like a wild leap in the dark today.
Can Entain bounce back?
Brokers are even more bullish on gambling group Entain (LSE: ENT). Eighteen analysts have issued one-year targets, and the median number of 1,015p is nearly 65% above the current 617p. Again, scepticism’s called for. The Entain share price has been turbulent lately, and many forecasts may pre-date recent slippage.
Entain’s troubles include a £585m settlement following a bribery probe into its former Turkish business, while tighter regulation in the UK and Netherlands squeezed profits. November’s Budget hiked UK online gambling duties, costing around £200m annually. The Entain share price is down 15% over one year and more than 50% over three.
Yet full-year 2025 numbers are promising. On 4 February, Entain reported 33% net revenue growth to $2.8bn and guided for $3.1bn to $3.2bn in 2026. EBITDA earnings swung from a $244m loss to a $220m profit. The board anticipates EBITDA will climb as high as $350m in 2026 then power on to $500m in 2027.
Again, there are risks. Gambling will always face tax and regulatory pressure and Entain must work hard to keep its nose clean. With a P/E around 20, it’s not cheap. Yet it does have a major US opportunity through BetMGM, its joint venture with MGM Resorts. It’s worth considering for investors happy to back gambling stocks but it’s at the higher end of the risk spectrum. Not for everyone.
