Bwin.party Digital Entertainment Plc : Bearish bets
 | 06/18/2012 | 09:47am Opinion : Bearish under 125 GBp Target price : 102 GBp Stop loss: 126 GBp | LONDON STOCK EXCHANGE Casinos / Gaming |
Bwin.party (BPTY) was formed from the merger of bwin Interactive Entertainment AG and PartyGaming Plc in March 2011 to create the world’s largest listed online gaming. Incorporated and licensed in Gibraltar, the Group has over 2,700 employees across Europe, India, Israel and the US. It commands leading market positions in each of four product: online sports betting, poker, casino and bingo with some of the world’s biggest online gaming brands including bwin, PartyPoker, PartyCasino and Foxy Bingo.
At the end of May, the group announced its strategy for tackling the fast-growing USD 8.2 billion social gaming market : the purchase for up to USD 23 millions in cash of a number of assets from Velasco Services Inc. and Orneon Limited. There is no information available about the profitability of the two businesses. Furthermore, this industry evolves rapidly : success is not easy to achieve and regulation remains unclear. It is very competitive because of the market growth which is favorable to new entrants.
Even if the company has a lot of cash, it is overvalued : BPTY’s PER for 2012 is 28.1x and 16.8x for 2013 and growth rates are low. Revenues from Euro 2012 and the Olympic Games are already priced. Analysts decrease their EPS and revenue revisions for a year. 2011 was an awful year and the company disappointed estimates. Surperformance rating confirms the ugly fundamentals.
Technically, BPTY is under every decreasing moving average (daily and weekly data). In 2011, there was a double bottom on the GBp 102.8 support. Due to the downtrend, the security is likely to test again this support. In the short term and the mid-term, the trend is bearish.
Due to graphical analysis, investors can sell the stock immediately. The target price is the GBp 102.8 support. To avoid important losses, a stop loss will be fixed in the 20-days moving average area, at GBp 126.
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| Maxime Nonglaton Copyright (c) 2012 4-Traders.com |
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