Thursday preview: Betfair and Sportingbet

Online gaming peers Betfair and Sportingbet are due to report their first-half and second-quarter results on Thursday morning, respectively.

Investec expects Betfair to report top-line growth of 5% in the first half to £179.4m, as a good performance in sports (+9%) offsets weaker trading in games (-4%) and poker (-6%).

The broker expects core earnings before interest, tax, depreciation and amortisation (EBITDA) to rise 4% to £46.4m.

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Speaking on Wednesday, Investec analyst James Hollins said: "The stage is set for new Betfair CEO, Breon Corcoran, to deliver his debut results and widely expected strategic review on Thursday. This, in our view, is likely to take a starkly different angle to the high growth, high tech, too-high promises laid out at the time of the IPO.

"Chastened by underperformance (returns and share price), the new CEO is likely to shape a future involving lower unregulated revenue and reduced costs."

Sportingbet has risen strongly over the past few months on the back of the potential offer from sector peers William Hill and GVC.

On December 4th, the company recommended a revised proposal from the two partners that valued it at £485m. The groups will have until next week to make a firm offer though.

Sportingbet investors will be waiting to see whether the pick-up in trading in November, guided to in the first-quarter trading statement, has continued.

The first quarter was particularly tough with total revenue dropping from £59.9m to £38.8m year-on-year.

Speaking on November 30th, Chief Executive Andrew McIver said: "After challenging trading conditions during the first quarter, I am pleased to report that November has seen a return to normal trading levels, with a particularly strong Australian sports margin."

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