HSBC lifts Paddy Power to 'hold' on strong interims

(ShareCast News) - HSBC upgraded Paddy Power to 'hold' from 'reduce' and lifted its price target to €96.5 from €71.5 following strong first-half results and the company's deal with Betfair.The bank said operating profit was 9% ahead of its estimate, driven by the online operations in Europe and Australia.HSBC said the deal with Betfair was "good news", bringing additional product, especially the exchange, which it thinks is high value and expects to be used to improve the offer. It said the deal has the potential to create a unique, market-leading business."The terms look attractive for Paddy, which retains a 52% equity stake, in line with the market capitalisation of the two groups the day before the deal was announced," it said.HSBC said the strong share price performance in the past week reflects the continued upgrades being delivered by the group and the potential acceleration that could be delivered by a Betfair transaction."This left our valuation-driven 'reduce' rating looking completely redundant," said the bank.At 1315 BST, Paddy Power shares were up 0.4% at €97.63.