Morgan Stanley Gives Paddy Power Betfair CEO an Unwanted Welcome
(Bloomberg) -- Peter Jackson started his new job as Paddy Power Betfair Plc's chief executive officer on Monday and Morgan Stanley analysts think he has his work cut out.
Coinciding with Jackson's arrival, the brokerage cut its recommendation on the gambling giant to underweight, the first time it has taken a negative stance since the company was formed by a merger almost two years ago.
As the new CEO tweeted about being “excited to wake up in Dublin for my new job,” Morgan Stanley analyst Ed Young was telling clients that the company's “premium valuation” may soon come under pressure. His price target of 7,500 pence is almost 10 percent below the average and implies about 14 percent downside from the current price. Shares fell as much as 2.7 percent on Monday.
Jackson needs to address “some major strategic issues,” and there are “few silver linings” from regulatory changes in Australia, Young wrote in a note to clients. The analyst said that while Paddy Power Betfair has “strong technology and a robust balance sheet,” expectations for a significant acceleration in online revenue growth after completion of a project to put customer interfaces onto a single platform “may not materialize.”
--With assistance from James Cone
To contact the reporter on this story: Paul Jarvis in London at pjarvis@bloomberg.net.
To contact the editors responsible for this story: Celeste Perri at cperri@bloomberg.net, Beth Mellor
©2018 Bloomberg L.P.
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