Power beats licensing odds

BOOKMAKERS Paddy Power are skipping over British regulatory hurdles, beating the odds to secure four new betting shop licences in North London.

The company is also in the process of securing a fifth licence in the area and the successes have prompted Goodbody Stockbrokers to re-iterate their buy recommendation on the stock.

“We still believe Paddy Power represents good value at these levels, given its growth profile, and we re-iterate our buy recommendation and 6 price target,” analyst Peter Horgan said yesterday.

Power had previously stated that it would have been happy to be awarded one of the four, for which it applied, given the stringent demand test which is applicable in Britain and the opposition it faces from the established bookmakers.

“Paddy Power intends to roll out these new licenses between now and the middle of 2003. These new shops underpin our forecasts for Paddy Power going forward and will help Paddy Power in building a brand presence in the UK before the proposed deregulation of the industry in 2004/2005.

“This gives increased credibility to Paddy Power’s strategy of using its strong Irish franchise to expand into the UK,” Mr Horgan added.

Paddy Power shares are up by close to 15% since the beginning of the month due to a positive shift in sentiment towards the sector after three positive news-flow items. However, it is still off its year high of 6 in May, the target price Davy has set for the stock.

The good news which helped lift the share price was: The decision by the British horse-racing board to place a 10% levy on the gross wins of layers in betting exchanges; and, the positive trading statements from both Ladbrokes and Stanley Leisure.