Investment bank Jefferies has downgraded bookmaker William Hill from "hold" to "underperform" and slashed its share price target following the company's profit warning last week.
Jefferies' target price has dropped to 280p from 380p after the bookie warned its online profits would fall by £25m in 2016, as digital performance was hit by tightened regulations and lower than expected gross win margins.
The bank also downgraded William Hill's expected earnings before interest and tax by 16 per cent to £260m.
William Hill's share price has dipped from around 370p before the trading update was issued on 23 March to around 330p on average over the following week. However, Jefferies has said it does not believe the share price decline since the announcement fully reflects the impact of continuing issues in the online division and the impact of customer-led exclusionary measures, such a self-exclusions and timeouts.
Self-exclusions allow customers to close their account from between six months and five years, while a much shorter-term measure, timeouts, allow customers to disable their account from between one and 30 days. Jefferies believes the effects of these measures will increase over 2016 and eat into the company's profits.
William Hill posted a full-year operating profit in 2015 of £290m, but was hit by an additional bill of £87m in UK gambling duties.
The Jefferies downgrade comes a day after the betting firm had two "misleading" December promotions banned by the Advertising Standards Agency.
William Hill declined to comment on the downgrade.