Broker snap: Rank on big winning streak

23rd Mar 2011 12:03

After years of being on the wrong side of legislation, casino and bingo hall operator Rank is on a big winning streak, according to Peel Hunt, after the company won its largest value added tax (VAT) claim to date.Rank announced on Tuesday that it won yet another VAT claim against HM Revenue & Customs (HMRC), this time totalling £74.8m, covering overpaid VAT on games of bingo from 1973 to 1996. Interest of £79.5m is due later this month.While the HMRC has launched an appeal, the broker estimates that - assuming Rank gets to keep all the cash - it should have a cash surplus of over £40m by the end of 2011, wiping out around £110m of net debt."If it does pursue acquisitions we believe these are most likely to be in the areas of online gaming and casinos. Management has thus far been cautious and we do not expect it to embark on a reckless acquisition programme," said analyst Nick Batram.A 'buy' is retained, and the target price is upped from 160p to 179p.