Analyst Picks Euro Gambling Stocks in Sector NoteDaniel Stewart & Company Deliver Comprehensive Report On Gambling Stocks |
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UK analyst Daniel Stewart & Co has just published a comprehensive analysis of plc’s engaged in the gaming sector entitled “Gambling – Jockeying for Position".
Most of the companies offer online poker and Daniel Stewart & Co has ranked them in order of key buys, buy, hold or sell.
The company says regulation is the main share price driver in the sector and, “… will continue to be the main driver of share prices over the medium term. The shape of regulation (tax, products, licenses) determines whether operators decide to exit, stay or enter a newly regulated market.
It also prefers online and mobile oriented stocks over retail noting, “Our research shows Online growth still outpaces retail / land based gambling. We prefer stocks with online exposure and more so prefer online stocks with an entry point into the US market through JV structures, these will likely be B2B suppliers as opposed to pure play operators.”
In relation to its preferred stocks it says, “…our Key Buys in our view have an entry point into the US market. Playtech (Buy; 450p), Sportingbet (Buy; 80p), 888 (Buy; 103p) are Key Buys. Our other Buys are online gambling stocks GVC (Buy; 225p), 32Red (Buy; 55p), Netplay (Buy 14p), and William Hill (Buy; 353p).”
It recommends holding Rank (Hold; 135p) and Paddy Power (Hold; €54) as they are, “… both quality land based businesses with well established brands. Our concern with Rank is that Interactive although growing strongly will become more insignificant if the acquisition of Gala Casinos completes, furthermore we are concerned about majority control / subsidiary status. Paddy Power has substantial gravitas online, however the valuation appears demanding and up to date with events for now."
It’s one sell recommendation is Ladbrokes (Sell; 136p). “Though we recognise Ladbrokes as a well established retail brand in our view the operator is failing to translate this into success online,” it suggests.
“We see scope for outperformance on ‘self help’ factors however we are yet to witness any evidence of ‘self help’, and until we see this we maintain our bearish view.”
The views expressed in this article are those of Daniel Stewart & Co.
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