Party Gaming profit forecasts

06.09.2005

Analysts in London were sharpening their pencils this week in preparation for the release of the first half 2005 results from PartyGaming Plc, the world's biggest online poker operator. And the consensus was that there may be first-half profits of about $250 million amid a boom in online gambling.

Analysts expect earnings before interest, tax, depreciation and goodwill amortization of $245 million to $259 million, according to three estimates gathered by Bloomberg News. Revenue was $440 million, the median estimate shows. PartyGaming is due to report this week.

The earnings are the first to be published by PartyGaming since the Gibraltar-based company raised GBP 1.04 billion ($1.9 billion) in an initial share offering in June. Figures for the first half of the previous year are not available.

PartyGaming controls about 54 percent of the online poker market (see Party Poker ), which according to Christensen Capital Advisors has grown from $90 million in 2002 to $1 billion in 2004. Analysts consider growth in online gambling will outweigh any potential regulatory concerns despite the fact that the company makes 87 percent of its revenue in the U.S.

``We believe the risk of an effective U.S. clampdown is limited -- in our view, investors should focus instead on the attractive cash generation, profitability and healthy growth prospects,'' Deutsche Bank analysts including Simon Champion said in a July 19 research note. Deutsche has a ``buy'' rating on PartyGaming stock, which has gained 35 percent since the initial share offer.

Citigroup Inc. analysts estimate that net income amounted to $213 million pounds.