Broker snap: 888 is 'inexpensive', says Panmure

LONDON (ShareCast) - Panmure Gordon has maintained its buy rating and 63p target price for online gaming group 888 Holdings ahead of its fourth quarter statement due tomorrow. Following the firm's statement in December in which it said clean earnings before interest, tax, depreciation and amortisation (EBITDA) for the year ending December 31st are expected to be significantly ahead of market expectations, Panmure raised its forecast by 28% to $51.1m. The broker expects 888 to report $88.5 in total operating income for the quarter, bringing the full-year figure to $329.5m, driven by a strong performance in poker and casino. Furthermore, the stock was also given a lift just last week when 888 signed an agreement with US firm Caesars Interactive Entertainment (CIE), in the company's first US online betting deal. Under the agreement, Dragonfish, 888's independent business to business arm, will power a selection of CIE's established and recognised poker brands. "Despite recent share price strength following the extension of Dragonfish's agreement with Caesars to cover the US, the stock is inexpensive on an [enterprise value]/EBITDA [ratio] of 5.2x," said Panmure analyst James Cooke. "The potential market opportunity for 888 is bigger than is currently being priced into the shares, in our view." Shares were trading up 4.09% at 57.25p on Monday afternoon. BC