PLAYTECH FAVOURED BY LEADING ANALYST

13 June 2008

J.P. Morgan initiates coverage of online gambling software developer with a bullish prediction


Good news for investors in the online gambling software developer and turnkey provider Playtech plc this week is that leading analyst firm J.P. Morgan has initiated coverage of the company with an "overweight" rating and positive predictions for its future. The target price is set to 700p.

In a research note published yesterday, the analyst company opines that Playtech is likely to generate above-average revenue growth in 2008/2009, with the online gaming industry potentially delivering double-digit revenue growth for the same period.

Playtech is expected to benefit going forward from a rise in its share of online gaming in the gambling market and its leading position in the industry, the analysts add.

The company is likely to generate a revenue/EPS Compound Annual Growth Rate (CAGR) of 46 percent to 49 percent for Full Year 07 to Full Year 09, aided by its robust cash generation, JP Morgan predicts.

Playtech was incepted in 1999 by Israeli businessman Teddy Sagi. The United Kingdom based company floated early in 2006 on on the London Stock Exchange under the symbol PTEC for approximately GBP 550 million at a flotation price of 257p. The company's current CEO is Mor Weizer.

After the passage of the UIGEA the company's stock suffered a one-day fall of over 40 percent despite having withdrawn from the US market. It subsequently recovered the losses to stand at near its 52-week peak in February 2007. The firm has excluded all US players from its properties.

Last week Numis Securities raised its rating on Playtech to ‘buy’ from ‘add’ and raised its price target to 561p from 510p, citing the online gambling software provider’s strong start to 2008. The company has benefited from contract wins, product launches and accelerated new game development, Numis said.

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