Ladbrokes given a boost by Berenberg upgrade

26th Aug 2016 08:46

(ShareCast News) - Berenberg has raised its rating on Ladbrokes to 'buy' from 'hold' and lifted its target price to 185p from 130p, saying the company is its second favourite stock in gaming after Playtech.The broker said since it initiated on Ladbrokes a number of positives have materialised with first half results beating expectations, the merger with Coral receiving approval and Boylesports proposing to buy around 360 shops to be disposed."We expect Coral to report strong numbers on 31 August, earnings momentum to continue; we therefore revisit our numbers and upgrade the stock to 'buy'.""The stock is up (c15% in one month), but it is not too late to join the rally."Earlier this month, Ladbrokes reported a 13.1% rise in first half revenue to £661.8m and a 61% increase in pre-tax profit to 339.8m, supported by favourable sporting results and a higher number of placed bets.Group revenue was driven growth in its online division, where revenues rose 41% to £158m. Berenberg expects Coral's third quarter results will show trends "at least as good as in its previous quarter" with a 9% year-on-year rise in revenues."We have therefore increased our estimates for both companies, which has resulted in 15% higher earnings per share 2017-2018E for the combined entity."Shares climbed 2.74% to 161.20p at 0940 BST.