Paddy Power’s earnings forecast upgraded by Davy after tax rethink

DAVY Stockbrokers has upgraded its earnings forecast for Irish bookmaker, Paddy Power in light of the Government’s recent decision to postpone upping the tax on bookmakers’ retail turnover from 1% to 2%, pending an overall rethink.

Davy said yesterday, in a research update on Paddy Power, that the company could realise tax savings of €6.1m this year as a direct result of no move being made on the levy, with a further saving of about €5.2m possible for next year.

“These savings increase 2009 earnings per share forecasts from 109.5c to 120.6c and 2010 earnings per share from 130.7c to 139.6c. In addition, we believe that the acquisition by Sportsbet [Paddy Power’s Australian business] of International All Sports will add a further 3.5c to 2010 earnings,” Davy said in the note.