U.S. banking giant JPMorgan Chase (JPM) has acquired a 5.47% voting stake in Star Entertainment Group (AU:SGR), making a significant move in the Australian gambling market. This comes as Star’s shares have plummeted in recent years due to liquidity challenges and regulatory scrutiny.
Star Entertainment Faces Headwinds
Star Entertainment has been grappling with a decline in its stock price, losing nearly 50% of its value year-to-date. Several investigations into allegations of anti-money laundering breaches have hurt the company’s reputation, leading to investor concerns. It should be noted that the company is currently responding to a show-cause notice from an Australian regulator regarding its casino license.
In response to these headwinds, Star has been actively restructuring its business. The company recently announced plans to consider divestments and has secured a new A$200 million ($137 million) credit facility from its corporate lenders.
Interestingly, Star has attracted interest from investors despite its troubles. Earlier this year, Australian asset manager, Perpetual, increased its stake in the company. Furthermore, Hard Rock Hotels & Casinos showed interest in acquiring Star, although the deal has not materialized.
It’s important to highlight that JPMorgan Chase’s involvement could help boost investor confidence and bring credibility to Star amidst its ongoing issues.
What Is the Price Target for JPM?
Turning to Wall Street, JPM stock has a Moderate Buy consensus rating based on 14 Buys and six Holds assigned in the last three months. At $225.64, the average JPMorgan price target implies a 9.94% upside potential. Shares of the company have gained 22.78% year-to-date.
