Paddy Power shares dip on lower expectations

Paddy Power fell the most in more than four months in Dublin trading, after Ireland's largest bookmaker said recent sports results have been "very poor" and currency "headwinds" may curb profit growth.

Results at the British Open, as well as at Wimbledon and horse racing went against the company, chief financial officer Cormac McCarthy said in an interview. The Galway races in July and August were a “punter fest,” he said.

Paddy Power fell as much as 5.8 per cent in intraday trading to €56.50, the biggest intraday decline since April 22nd, and traded at €58.75 as of 8.40am in Dublin. Trading volume in the stock at about 115,804 shares was 137 per cent of the daily average over the past three months.

Goodbody Stockbrokers said it expects analysts to reduce their estimates for full-year earnings by about 5 per cent. Analysts expected full-year pre-tax profit of €159 million, according to estimates compiled by Bloomberg.

“The reduction to consensus will disappoint but it is driven by adverse sporting results,” Gavin Kelleher, an analyst at Goodbody, who has a buy rating on the company, said in a note. “However, these are not structural and should not come as a major surprise given commentary from peers more recently.”

Paddy Power said it’s on track to achieve “low to mid double digit” operating profit growth in constant currency in 2013. Currency translation “headwinds” if maintained at current levels for the full year would cut constant currency year-on-year profit growth by 4 per cent, the company said. (Bloomberg)