Bloomberg News

Paddy Power Falls After Bank of America Cut, Australian Report

December 09, 2011

Dec. 9 (Bloomberg) -- Paddy Power Plc fell the most in four months after Bank of America Corp. cut its recommendation on the stock to “underperform” and an Australian parliamentary committee recommended keeping in place a ban on live online gambling.

Paddy Power fell as much as 5.2 percent in Dublin trading, the biggest intraday fall since August 4, and traded 2.1 percent lower at 40.79 euros as of 9:31 a.m. Bank of America cut Paddy Power from “neutral” citing downside risks to the Dublin-based bookmakers profitability from the potential imposition of 15 percent U.K. online tax on gross profit from 2014.

Separately, an Australian parliamentary committee recommended in a non-binding report that a ban on live in-play online gambling be maintained. While the recommendations are “negative” for online operators in Australia such as Paddy Power, Dublin-based securities firm Davy said the ban would have no material effect on its estimates for Paddy Power.

Paddy Power has online gambling operations in both the U.K. and Australia and generated 81 percent of operating profit from online activities in the first half. About 73 percent of operating profit came from outside of Ireland, the company said Aug. 30.

To contact the editor responsible for this story: Finbarr Flynn at fflynn3@bloomberg.net


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