Analysts at HSBC this week took a brighter view of poker giant Party
Gaming, lifting the share price target to 122p and revealing that
there is a strong potential upside of 30 percent on the share price
at the 94p level.
Analysts noted that although the PartyGaming share price has retreated
considerable from its July high of 179p, the fall has been overdone
and some adjustment can be expected.
"We expect continued growth from its current core market,
benefits from the data mining project started this year and new game
offerings will drive top-line growth,” wrote Richard
Wainwright, analyst for HSBC.
The pessimistic comments by the Party Gaming CEO when the September
interims were released are widely believed to have triggered the 30
percent fall in the share price that followed. But Wainwright noted
the fears regarding the strength of the poker market have not been
supported by the third-quarter key performance indicators (KPIs) from
either PartyGaming, Sportingbet 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,”
Wainwright opined. The analyst also commented on the recent deals
to acquire former skins, saying that consolidation within the i-gaming
industry would probably increase.
The question on many broker and investor lips this week was whether
Party Gaming will press ahead with its previously announced negotiations
to acquire former skin Empire Online. The latter's share price has
taken a hammering over the past few days, driving it down to a market
capitalization of only GBP 180 million. Rumors are rife that the deal
may be off, inducing more uncertainty and caution among investors.