Market Report: Odds against Bwin.Party in Europe make it a loser

Toby Green

The Cheltenham Festival may be coming to a climax, but punters were deciding that Bwin.Party was too much of a long shot yesterday. The online gambling group was left near the back of the pack thanks to fears over the cost of a tough battle ahead with its rivals in Europe.

A number of countries on the continent are introducing online gambling regulations this year, which will bring with it an increase in tax costs. As a result, warned Macquarie Capital's Angus Tweedie, the sector will have to splash out an increasing amount on advertising in order to gain enough of a market share to make the economics work.

He pointed out that a third of Bwin.Party's revenues come from markets which are expected to regulate this year, saying that therefore it was likely to be the worst hit in the sector by the increased marketing costs required.

Mr Tweedie – who has an "underperform" rating on the group – went on to slash his target price to 145p, prompting it to slump 8p to 153p.

Overall, the FTSE 100 continued to lack direction as it edged down another 4.71 points to 5,940.72.

"The overriding feature of today has been the quiet," said IG Index's Yusuf Heusen, with even positive manufacturing and employment data from the US failing to excite.

Next closed near the summit after optimistic buying ahead of the retailer's preliminary results which are due next week. Both Panmure Gordon and UBS reiterated their "buy" advice, with the former's analyst, Jean Roche, claiming that the group's guidance for the current financial year was "probably too conservative".

Having been hit by fears over China earlier in the week, many heavyweight miners were back in favour, including Rio Tinto which advanced 67.5p to 3,547.5p, while Anglo American ticked up 17.5p to 2,581.5p.

With the latter releasing its annual report, market gossips pointed to chairman Sir John Parker's comments that the digger would "continue to examine M&A opportunities as one of our strategic priorities". As a result, they linked this to oft-floated speculation it could make a move for US coal producer Walter Energy, although traders were unimpressed. At the same time, vague rumours were also being revived in the US claiming "sage of Omaha" Warren Buffett could be looking at a potential acquisition in the coal space.

Shire ended up taking the wooden spoon following the pharmaceutical group's decision late on Wednesday to withdraw its US FDA application for Fabry disease drug Replagal, blaming fears the regulator would demand further clinical trials. The group was driven back 70p to 2,158p, with it also announcing it had agreed to snap up US firm FerroKin BioSciences in a deal that could be worth up to $325m (£206.6m).

Tesco was also in the red, sliding 3.1p to 321.75p on the news that the head of its UK operations, Richard Brasher, is to leave the supermarket in July.

The top bosses in the property sector were on the receiving end of a rather stark warning, as JPMorgan said they either need to "speed up or find a bride", otherwise they risk being "shipped out".

Analysts from the broker claimed the recent acquisition of nearly 29 per cent of shopping centre operator Klepierre by US firm Simon Property should act as a "wake-up call", warning that "predators will exploit their relatively low cost of capital" to make M&A a major theme.

With the property companies trading at a large discount to the value of their assets, the scribblers argued that "the whole European sector looks vulnerable" and chose Hammerson – which climbed 0.7p to 420.8p – as one of a number of potential bid targets.

Misys retreated 2.5p to 322.5p ahead of Monday's deadline for private equity firm Vista to decide whether to make a bid for the software group. Its Swiss rival, Temenos, which pulled out of the race earlier in the week, released a cautious trading update late on Wednesday, and Espirito Santo said it, "clearly has negative implications for the potential price" Vista or the other possible bidder – a team-up between CVC Capital and ValueAct – could offer.

Domino Printing Sciences was the horror show of the day. The industrial printer slumped 15.52 per cent to 560.5p after warning that, with times tough in Europe as well as a drop in major projects from China, its sales were unlikely to rise this year.

Down on the small-cap index, Game Group rocketed up 64.29 per cent to 3.45p in response to the news that OpCapita may make a rescue bid for the troubled video games retailer.

Meanwhile, Serica Energy spurted up 2.25p to 31.5p after the oil group signed a deal with sector giant BP (6.3p worse off at 492.75p) to search for black gold off the Namibian coast.

Independent Comment
blog comments powered by Disqus
Career Services

Day In a Page

The 50 Best beachwear

The 50 Best beachwear

The hottest summer gear for men and women
Still standing: George Galloway reveals why his staunchly Leftist outlook is still invariably right

Still standing: George Galloway

Written off, ridiculed, wrongly accused of taking bribes the honourable member for Bradford West, has never bowed to the critics.
How will Daniel Radcliffe's fans react to his latest turn - as a damaged, drug-taking Beatnik poet?

Daniel Radcliffe as drug-taking Beatnik poet

His decade as the boy wizard may be over, but that hasn't hexed Daniel Radcliffe's enchanted life.
For whom the bell tolls: £20m 'Memo' project takes shape on Dorset's Jurassic coast

'Memo' project takes shape on Dorset coast

It started as a stonemason's visionary idea – to commemorate all the species that have ever existed and are now extinct.
Just add sunshine: Bill Granger's Turkish delights

Just add sunshine: Bill Granger's Turkish delights

Turkish cuisine is perfect for those long, sociable weekend meals with friends. It's just a shame that money can't buy the key ingredient.
Objets czar: David Usborne’s collection of myriad objects is quite the mystery

Objets czar: David Usborne’s collection of myriad objects

To others, they're junk. To David Usborne, they are his life: useful gizmos, mysterious thingamajigs and anonymous articles that dominate his home.
The iron ore lady: Why the world's richest woman is mired in controversy

World's richest woman: Gina Rinehart

Family feuds, attempts to control the Australian media and bitter public disputes are keeping the mining magnate in the headlines.
We just click: How Lego keeps building on its success

How Lego keeps building on its success

This year, Lego announced record profits. Gerard Gilbert visits its Denmark HQ.
The other bits: Mark Hix creates delicious and economical meals with cheaper cuts of meat

Mark Hix cooks with cheaper cuts of meat

Our chef creates delicious and economical meals on a budget
Strokes of genius: How to create summer's bold make-up look

Strokes of genius: Summer's bold make-up

From coral lips to fly-away fringes, make-up artist Kim Brown and hair stylist Richard Scorer reveal how to create the look
Marking his territory: Kilian Hennessy creates fragrances designed to provoke the senses

Marking his territory: Kilian Hennessy

The perfumer creates fragrances designed to provoke the senses
Photo essay: Britain's 1948 Olympians today

Britain's 1948 Olympians today

Photo essay
The top five E3 2012 triumphs: From Ubisoft's suite of titles to Dishonored and The Last of Us

The top five E3 2012 triumphs

The games and moments that left us grinning like the Cheshire Cat
The green movement at 50: Can the world be saved?

Can the world be saved?

Population growth and climate change are the big problems facing the earth in the next 50 years. But are there any solutions?
France: Will xenophobia go mainstream?

France: Will xenophobia go mainstream?

In the beautiful Rhone delta, John Lichfield visits a village where a dangerous new political landscape is taking shape