Sniper
11-29-2005, 09:49 PM
PartyGaming regains float price after poker scare
LONDON (Reuters) - Shares in the world's biggest online poker operator PartyGaming (LSE: PRTY.L - news) <PRTY.L> regained their float price on Tuesday, 13 weeks after its warning on poker growth knocked over 3 billion pounds from its market value.
Shares in the company were up 6.9 percent at 117 pence at 3:19 British time, having floated at 116p.
After a high-profile 4.6 billion pounds London flotation in June, the owner of PartyPoker and StarluckCasino saw its market value soar to over 7 billion pounds.
At this point, analysts were predicting the online poker sector would grow to more than $6 billion (3.5 billion pounds) a year by 2009.
Then on September 6 came the company's warning that poker growth was "moderating". The shares plummeted below the float price as the company lost over 2 billion pounds in market value -- one of the most dramatic losses in recent years.
Further sector warnings by rivals wiped another 1.5 billion pounds off its market value by mid-October.
Then the shares turned, buoyed by PartyGaming's split from former partners like Empire Online (LSE: EOL.L - news) <EOL.L> and a more aggressive competitive strategy.
PartyGaming's shares gained a further lift this week from an article in the Sunday Times newspaper that appeared to rubbish Empire Online's threat to sue PartyGaming over "damage" caused by the split.
On Tuesday, investment bank Morgan Stanley (NYSE: MWD - news) initiated coverage of PartyGaming with an Overweight rating and a price target of 130 pence.
Morgan Stanley analysts said PartyGaming would benefit from splitting with its former partners and from cross-selling products like bingo and casino games to its poker players.
"Our overriding view is that Party will remain a winner in what we think will remain a significant, viable and profitable sector," they said in a research note.
LONDON (Reuters) - Shares in the world's biggest online poker operator PartyGaming (LSE: PRTY.L - news) <PRTY.L> regained their float price on Tuesday, 13 weeks after its warning on poker growth knocked over 3 billion pounds from its market value.
Shares in the company were up 6.9 percent at 117 pence at 3:19 British time, having floated at 116p.
After a high-profile 4.6 billion pounds London flotation in June, the owner of PartyPoker and StarluckCasino saw its market value soar to over 7 billion pounds.
At this point, analysts were predicting the online poker sector would grow to more than $6 billion (3.5 billion pounds) a year by 2009.
Then on September 6 came the company's warning that poker growth was "moderating". The shares plummeted below the float price as the company lost over 2 billion pounds in market value -- one of the most dramatic losses in recent years.
Further sector warnings by rivals wiped another 1.5 billion pounds off its market value by mid-October.
Then the shares turned, buoyed by PartyGaming's split from former partners like Empire Online (LSE: EOL.L - news) <EOL.L> and a more aggressive competitive strategy.
PartyGaming's shares gained a further lift this week from an article in the Sunday Times newspaper that appeared to rubbish Empire Online's threat to sue PartyGaming over "damage" caused by the split.
On Tuesday, investment bank Morgan Stanley (NYSE: MWD - news) initiated coverage of PartyGaming with an Overweight rating and a price target of 130 pence.
Morgan Stanley analysts said PartyGaming would benefit from splitting with its former partners and from cross-selling products like bingo and casino games to its poker players.
"Our overriding view is that Party will remain a winner in what we think will remain a significant, viable and profitable sector," they said in a research note.