Paddy Power’s shares get thumbs up

INVESTORS should seize the opportunity of the 3.5% drop in Paddy Power’s share price to buy, after a profit warning by British rival Stanley Leisure, according to stockbrokers Dolmen Securities.

The announcement by Stanley Leisure precipitated a 3.6% fall in the value of bookmakers Paddy Power’s shares, but Irish brokers believe the lack of confidence is unmerited. Dolmen analyst Pat Duggan concluded a detailed note to clients yesterday with a buy recommendation: “We continue to be positive on Paddy Power and see the weakness caused by this trading update from Stanley Leisure as a buying opportunity.”

Mr Duggan outlined that Stanley Leisure gave guidance that full year 2003 profits would be below market consensus: “The company blamed a run of bad results in the racing division and a combination of higher costs and negative drop and win growth in Q4 as the cause of gaming profits likely to be only slightly ahead of last year,” he said.

“We would remain positive on Paddy Power and would attribute the performance of Stanley Leisure to company specific factors especially with regard to their run of results. Looking at Paddy Power, the outlook for the group remains confident with Paddy Power maintaining margin projections, even increasing the projections for the online projections to 7.5% to 8.5%.”

There is no doubt that Monty’s Pass’ win in the Grand National hit all Irish bookmakers hard as did the run of winning favourites at Cheltenham.