Ladbrokes and William Hill drop on Credit Suisse downgrades; regulatory headwinds cited

(ShareCast News) - London-listed bookmakers Ladbrokes and William Hill were feeling the pinch in early trade after downgrades by Credit Suisse.The bank cut its stance on Ladbrokes to 'underperform' from 'neutral' and reduced the target price to 85p from 115p. At the same time, it downgraded William Hill to 'neutral' from 'outperform' and cut the target to 420p from 455p."Between 2012 and 2015, changes in regulation in the UK have led to earnings downgrades of 28% for William Hill and 46% for Ladbrokes in 2015E. Despite this, consensus forecasts assume no further regulatory change," said CS.As far as regulator change is concerned, it reckoned headwinds are likely to continue in the medium term."We see future regulatory risk across the board, although regulatory headwinds in UK retail are likely to have a larger negative impact than those in the online business."It was a slightly cheerier picture for Paddy Power, as the bank lifted its price target to €85 from €82 owing to the inclusion of a share buyback, and kept the stock at 'outperform'."We see scope for Paddy Power to return over 30% of its market cap to shareholders by 2020," said CS.At 0936 BST, Ladbrokes shares were down 1.5% at 128.20p and William Hill was 2% weaker at 390.89p.