Betfair set float price

[Euler]

http://www.ft.com/cms/s/0/6546a196-f86f ... z16PE06LCU

Betfair was targeted by analysts in a quiet London market on Thursday when they said the stock was overvalued by 70 per cent.

“Betfair is approaching maturity in the UK, faces significant regulatory threats elsewhere, and will gain little traction in financials,” said Investec analyst Paul Leyland.

Betfair founders and early backers last month floated the stock at £13 apiece, which valued the sports betting exchange at £1.3bn. This valuation needed “everything to go right”, Investec said. But it argued that growth was becoming tougher to deliver as occasional gamblers were less likely to be attracted by the better odds it offered. Investec also said Betfair’s expansion plans were far from guaranteed.

“Betfair needs a liberal tax and regulatory approach to online gambling in order to operate, let alone to thrive,” Mr Leyland said. “We see this as increasingly unlikely in any major market.”

Moving on to Lmax, Betfair’s spin-off for financial market trading, Investec described it as “a solution without a problem” that did nothing to challenge the existing broker model. “We do not see Betfair’s ‘disruptive technology’ having much to disrupt,” it said.

The broker set a 445p target price on Betfair stock, which closed lower by 0.5 per cent at £14.71.

[Iron]

I bet Bert had a private chuckle when he read that, whilst thinking about how much the flotation had made him...

Jeff

http://www.ft.com/cms/s/0/6546a196-f86f ... z16PE06LCU

Betfair was targeted by analysts in a quiet London market on Thursday when they said the stock was overvalued by 70 per cent.

[thehawk009]

anyone got a position on this one? fairly aggressive sell off down to 13 now.

http://ftalphaville.ft.com/blog/2010/11 ... ing-heavy/

[Iron]

It looks like reality is beginning to dawn on the market...

It will be interesting to see how the price changes in the run up to the levy decision in the New Year.

Jeff

anyone got a position on this one? fairly aggressive sell off down to 13 now.

http://ftalphaville.ft.com/blog/2010/11 ... ing-heavy/

[Euler]

I thought the Aus issues would have had an impact but it doesn't seem to have had much.

I think in the wider context, there will be lots of holders who will have waited to cash in. If they see the price falling them may be tempted to sell. There will probably be quite a stock overhang on this one for a while unless real buying pressure is in the market.

[Iron]

It's a great opportunity for anyone who's had problems with Betfair to get their own back and make a quick buck by shorting them!

Jeff

I thought the Aus issues would have had an impact but it doesn't seem to have had much.

I think in the wider context, there will be lots of holders who will have waited to cash in. If they see the price falling them may be tempted to sell. There will probably be quite a stock overhang on this one for a while unless real buying pressure is in the market.

[Euler]

Betfair 1H results: -

http://www.investegate.co.uk/Article.as ... 700098801X

City didn't like them and the shares are now under £10.

'Highlights'

· Underlying revenue up 12.3% to £188.5m (H1 FY10: £168.0m) 1

· Underlying Adjusted EBITDA up 24.0% to £31.2m (H1 FY10: £25.1m) 1

· Underlying profit after tax up 49.8% to £14.4m (H1 FY10: £9.6m) 1

· Reported profit after tax down 12.7% to £6.8m (H1 FY10: £7.8m) after net exceptional costs of £14.7m primarily associated with the Company's listing

· Cash position at 31 October 2010 of £178.2m with no debt (31 October 2009: £136.5m)

· Customer funds held on deposit in separate ring fenced accounts at 31 October 2010 of £288.0m (31 October 2009: £259.1m)

Core Betfair

Core Betfair includes Betfair's unique Betting Exchange and its portfolio of other sports betting, games and poker products.


· Active customers up 31.1% to 654,000 (H1 FY10: 499,000)

· Revenue growth of 11.3% to £167.2m (H1 FY10: £150.1m)

· Strong revenue growth of 22.3% in Q1 driven by World Cup, followed by growth of 1.6% in Q2

· 25.7% growth in Adjusted EBITDA to £35.5m (H1 FY10: £28.2m) 2

· Adjusted EBITDA margin of 21.2% (H1 FY10: 18.8%) 2

Caveats

1 Underlying figures are stated after making a number of adjustments in order to aid comparability between periods. These adjustments involve the exclusion, where relevant, of: the revenue and EBITDA from the High rollers segment; exceptional items; equity settled share-based payments; profit on sale of financial asset; and the associated tax effect of these adjustments. A reconciliation of reported figures to underlying figures is set out in Appendix 2

2 Excluding exceptional items and equity settled share-based payments

[Iron]

What's the difference between underlying profit and reported profit?

Jeff

· Underlying profit after tax up 49.8% to £14.4m (H1 FY10: £9.6m) 1

· Reported profit after tax down 12.7% to £6.8m

[Euler]

What's the difference between underlying profit and reported profit?

Reported profit is real and 'underlying' profit is before items that are considered exceptional or sometimes EBITDA. But of course a lot of exceptions and ITDA are 'real' costs in the long run.

[PeterLe]

Read an article in the evening standard tonight..About the share price...
i think it said that the price traded at 10.40 (?) today...whereas the target price is a good 3 or 4 pounds higher...Apt comment from David Yu who said ..markets have a way of finding the correct price!
i was wondering if it would be worth a punt at this price..at least you could gain entrance to the annual shareholders meeting if you held stock???

[Euler]

Well they are better value than they were but they are still not cheap.

Few insider purchases today, so they obviously think there is value in there.

[PeterLe]

Well they are better value than they were but they are still not cheap.

Few insider purchases today, so they obviously think there is value in there.

At what price would you consider them to be good value..and how many would you need to be able to attend the shareholders annual meeting?
Thanks
Peter

[Euler]

A lot lower than the current price, but that's because I am used to buying value stocks. Betfair is valued as a hot technology stock and that makes it incredibly hard to value accurately as all the potential is in the growth which hasn't happened yet and is uncertain. I can't accurately make a judgement so I will pass on it as a true investment. From an investment perspective Betfair is a bit of a punt in my books.

You only need one share to become a shareholder and gain access to the AGM. Though broker fees etc would make a bigger number a more economic purchase.

[LeTiss]

I wouldn't recommend BF shares to anyone

IMO they're a company in decline

[andyfuller]

Decent falls this afternoon - down 3.25% and now sitting at just 907p