Sign up Australia
Proactive Investors - Run By Investors For Investors

Paddy Power Betfair upgraded to 'hold' following summer share price slump

Berenberg has reduced the estimated fair value of the established business as a result of lower underlying estimates but given the recent share price slump, it has upgraded Paddy Power to 'hold'
Basketball
Save yourself a lot of wasted time and just watch the last two minutes of any basketball game

Bookie Paddy Power Betfair PLC (LON:PPB) has had a bad week but it received a boost on Friday from Berenberg, which has upgraded the stock.

The shares were hit on Tuesday when the Irish government announced plans to double betting duties but Berenberg is more concerned with the firm’s prospects in the US, where liberalisation of the regulations surrounding betting on sporting events is taking place.

READ: Paddy Power Betfair’s FanDuel teams up with Boyd Gaming

Berenberg believes that after all the early excitement about the opening up of the US sports-betting market, it is too soon to start getting sceptical.

Its analysts value the opportunity at up to US$25bn. The German bank thinks GVC Holdings PLC (LON:GVC) is the best positioned to exploit the market, followed by Paddy Power Betfair, while William Hill plc could lag.

GVC remains its only ‘buy’ in the sector as, in Berenberg’s view, it is still the only gaming stock that is fundamentally undervalued in terms of its established business.

Paddy Power gets some love, however, after a rough four months that has seen the share price slump from 8,595p to 6,055p. Berenberg has cut its target price from 7,000p to 6,500p but thanks to the recent share price slide that makes it a ‘hold’, rather than a ‘sell’, which was Berenberg’s previous rating.

“This is a risky call, but we struggle to see downside potential at this level,” Berenberg said.

It has looked at the Paddy Power Betfair-FanDuel deal as well and thinks that the joint venture could benefit from FanDuel’s attractive brand and the distribution capabilities provided by Boyd Gaming.

“We think it could reach 15% market share over the long term,” Berenberg asserted.

View full PPB profile View Profile

Paddy Power Betfair plc Timeline

Related Articles

ZoomAway Travel Inc embracing blockchain, which is set to push out middle man in hospitality and act
January 12 2018
The firm plans to begin rolling out cryptocurrency payments into its white label and registration management system (RMS) clients
Festival crowd
August 20 2018
There could be a potential uplift of in both revenue and underlying earnings if the firm manages to capture a slice of the UK's 4mln festival-goers
Oil pollution
July 03 2018
A name change might be in order if PCG pulls the trigger on two investments it is mulling

No investment advice

The information on this Site is of a general nature only. It does not take your specific needs or circumstances into consideration, so you should look at your own financial position, objectives and requirements and seek financial advice before making any financial decisions. You acknowledge and understand that neither the Company, its related bodies corporate, the information providers or their affiliates will advise you personally about the nature, potential value or suitability of any particular security, portfolio of securities, transaction, investment strategy, or other matter. You should read our FSG and any other relevant disclosure documents and if necessary seek persona advice prior to making any investment decision.

You understand and agree that no Content (as defined below) published on the Site constitutes a recommendation that any particular security, portfolio of securities, transaction, or investment strategy is suitable or advisable for any specific person.

You understand that in certain circumstances the Company, its related bodies corporate, the information providers or their affiliates may have received, or be entitled to receive, financial or other consideration in connection with promoting, and providing information about, certain entities on the Site and in communications otherwise provided to you.

You understand that price and other data is supplied by sources believed to be reliable, that the calculations herein are made using such data, and that neither such data nor such calculations are guaranteed by these sources, the Company, the information providers or any other person or entity, and may not be complete or accurate. From time to time, reference may be made in our marketing materials to prior articles and opinions we have published. These references may be selective, may reference only a portion of an article or recommendation, and are likely not to be current. As markets change continuously, previously published information and data may not be current and should not be relied upon.

Before you act on any general advice we provide, please consider whether it is appropriate for your personal circumstances.

© Proactive Investors 2018

Proactive Investors Australia PTY LTD ACN:132787654 ABN:19132787654.

Market Indices, Commodities and Regulatory News Headlines copyright © Morningstar. Data delayed 15 minutes unless otherwise indicated. Terms of use