Bookie a good bet - broker

One More Thing:Paddy Power's stellar interim results might have prompted Citigroup to upgrade its price target for the bookie chain by 10.4 per cent, to €26.50 from €24, but its London-based analysts remain "nervous about chasing the stock on inflated results-related" earnings per share (eps).

"We may miss out on the structural growth given this stance, but before buying more stock, investors should remember the November 2005 profit warning when the stock fell by [ more than] 20 per cent on a sports results-related warning," Citigroup said in a note to clients.

Punters have taken a hammering in recent months, helping Paddy Power to more than double its operating profit to €40.8 million. Its betting shops in the UK even achieved a small trading profit for the first time since they opened in 2002 while the Irish retail business, its online unit and telephone arm all performed well.

Citigroup has raised its 2008 eps forecast for Paddy Power by 19 per cent to €1.30.

Half of the upgrade is driven by a lower betting tax regime and the balance by "innovation, roll-out, geographical expansion and share buybacks".

The broker, however, has retained its "hold" recommendation on the Irish bookie, which it placed on the stock in May.

"The best time to buy bookmaking stocks is after unfavourable sports results for the bookies," Citigroup added.