888 beats estimates

Date: Tuesday 09 Feb 2010

Online gaming group 888 has beaten fourth quarter revenue estimates after business picked up late on in the period.

The company reported revenue of $67.9m for the three months ended 31 December as an 8% increase in the first five weeks of the period turned into a 12% quarter-on-quarter gain.

Core Casino business B2C was behind much of the 14% year-on-year revenue growth, with net revenue there up to $33.4m, representing QoQ and YoY growth of 14% and 13% respectively.

Revenue for all of 2009 came in at $246.7m and the firm said it remains confident about meeting 2009 consensus (clean) EBITDA and of further progress during the current year.

Broker Daniel Stewart predicts full-year earnings of $45m, a touch above consensus at $44.4m.

888 said the first quarter of 2010 has started well, with average daily total operating income more than 7% higher than the fourth quarter during the first five weeks of the year.

‘With revenue ahead of expectations and the group delivering, in our opinion, earning accretive deals and attractive B2B agreements, with scope for more acquisitions to come from a net cash balance at period-end of c.$60m, we remain highly bullish on 888,’ says Daniel Stewart.

Trading at 12.9x FY10E earnings, it has an unchanged 145p price target and ‘buy’ recommendation.

Final results for 2009 will be issued on 23 March.

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