‘compelling’, says Deutsche30 Nov 2015 07:40
by Daniel Grote on Nov 30, 2015 at 05:00
Citywire
Betfair momentum ‘compelling’, says Deutsche
Deutsche Bank has upgraded Betfair (BETF) ahead of its merger with Paddy Power, arguing the online betting firm boasts ‘compelling’ momentum.
Analyst Richard Carter hiked his target price to £42.00 from £26.50. The shares rose 1.8% to £36.65 on Friday.
‘We are upgrading our recommendation to “buy” as we think (i) Betfair can grow revenues / profits materially above the market growth rate following the relentless focus on product innovation couples with brand investment over the past 24 months, (ii) we see upside risks to forecasts and (iii) the upcoming merger with paddy Power offers the ability to leverage higher returns on incremental investment given the material increase in scale,’ he said.
Carter hiked his estimates of revenue growth in the company’s sports and gaming divisions from 10% to 15% for next year and 2017. ‘However, given the group’s market leading products, rising marketing budget of c.£120 million, and UK market share of only c.12%, we think our 15% growth assumption could prove conservative,’ he said.