Analysts at HSBC slapped a price target of 122p on the shares of PartyGaming, saying they saw potential upside of 30% on the share price at levels of 94p.
In a research note initiating coverage with an ‘Overweight’ rating, HSBC – the house broker for 888 Holdings – noted that although the PartyGaming share price has retraced from its July high of 179p, the fall has been overdone.
“We expect continued growth from its current core market [US], benefits from the data mining project started this year and new game offerings will drive top-line growth,” wrote Richard Wainwright, analyst for HSBC.
PartyGaming has been under a cloud since the company issued its interims in September when comments about the future growth prospects triggered a 30% fall in the share price. But Wainwright noted the fears regarding the strength of the poker market have not been borne out by the third-quarter key performance indicators (KPIs) from either PartyGaming or 888.
“PartyGaming’s de-rating has nevertheless had a significant impact on the sector… As a result, we believe the online gaming sector is now relatively undervalued versus its growth rates.”
However, Wainwright says that the sector will need to see a longer series of good KPI numbers and financial performances over a period of 12 months for confidence in the sector to return. Noting the recent US$14.5m PartyGaming deal to acquire MultiPoker, Wainwright added he expected consolidation within the egaming sector to increase and that PartyGaming is likely to be a “key consolidator” within the space.
Meanwhile, the performance of the Empire Online share price this week suggests that many in the City of London are betting against PartyGaming making a substantial offer for the business. At one point on 18 November, the Empire share price slumped to 58.5p, giving it a market cap valuation of around £180m.
PartyGaming Predicts Further Online Casino Singapore Growth
The popularity and proliferation of poker, both on and offline, is expected to continue according to Richard Segal, CEO of PartyGaming – the world’s largest online poker operator for PartyPoker.2005 was a landmark year for online poker and the online gaming industry as a whole. This year saw three large London stock market flotations, generating revenues of around $3.5 billion (2 billion pounds). Moreover, poker games and books are now topping Christmas lists the world over.
At the fore of the online explosion is PartyGaming who are the dominant force in the industry. After a high-profile £4.6 billion flotation in June, the owner of PartyPoker and Starluck Casino saw its market value soar to over £7 billion.The dawning of 2006 promises more exciting – and likely profitable – prospects for PartyGaming with the launch of its new PartyCasino site to run alongside its existing Starluck Casino, as well as two new games.
‘There will be two new products next year… In the first half there will be a person-to-person skill game and in the second half there will be another more akin to casino,” said Segal.
PartyGaming will also launch a ’shared purse’, which will help players switch from game to game. Segal explains, ‘If you want to go from playing on Starluck Casino to PartyPoker, it’s currently the equivalent of going from eBay to Amazon… It’s not just one click away, but that will change.’