Broker snap: Ladbrokes not the best bet

14th May 2010 12:16

Today's earnings from bookmaker Ladbrokes were broadly in line with expectations, but analysts worry about the risk of increased gaming duty in the new government's emergency budget.Group net revenue fell 6% over the four months to April, with betting shop net revenue down 11%. Operating profit rose 3%, though this excludes high roller customers, where profit fell from £25m to £8.9m. EBIT, excluding high rollers, rose 3% year-on-year."We think risks remain on the downside, despite signs of improvement in machines and the potential for turnaround under new chief executive Richard Glynn," said Panmure Gordon.It repeats 'sell' advice and 141p target price, preferring Rank which it rates a 'buy' with 142p target. KBC Peel Hunt says an unimpressive top line at Ladbrokes is being mitigated by cost improvement, but questions what will happen when the cost savings run out.It prefers rival William Hill, which is trading on a 10% PE discount (ex high rollers) to 2010 and has strong momentum in its online business."We see no reason to turn more positive on Ladbrokes at this stage," it told clients Friday.