Newly merged gambling operator Paddy Power Betfair will likely post 16% increase in net revenue to £867 million (€1.09 billion) for 2016, according to a report from Davy Stockbrokers. Analysts at Ireland’s largest stockbroker have also noted that the gambling company will see net revenue grow 10% in 2017 and 8% in 2018.
According to experts, the combined group will also imminently become debt free, this making it possible for shareholders to receive cash returns, if no further acquisition targets are identified.
David Jennings and Robert Stokes, analysts at Davy Stockbrokers, have said in their report that the major gambling operator is likely to have more than £550 million on “its balance sheet by the end of 2018.” The industry experts have also noted that cash returns are to occur only if the merged company does not find other businesses to purchase.
For instance, Paddy Power solely returned a little less than €400 million in surplus cash to its shareholders in 2015. Yet, Davy Stockbrokers analysts believe that the combined group would certainly look to expand its global reach, especially given the fact that more and more markets are expected to be regulated in the years to come. Certain “grey market investment” could also be made by Paddy Power Betfair, the two experts have added.
According to the report, Paddy Power Betfair will likely boost its online sales by about 16% by the end of the year. The two Davy Stockbrokers analysts have pointed out that online growth will mainly depend on whether the two businesses have integrated their operations successfully as well as on the merged group’s ability to engage in additional development of brands define the gambling market.
In addition, Australian sales are expected to grow 22%, sales in the US are to increase 6%, and the company’s UK and Irish retail business is expected to report a 2% growth in sales by the end of 2016. The two industry experts have pointed out in their report that Paddy Power Betfair’s retail division will be the one at risk mainly due to the regulatory uncertainty clouding gaming machines across the UK.
Paddy Power Betfair is targeting cost savings of £50 million within the first three years of their joint operations. The Davy Stockbrokers reports has suggested that the merged group’s goal is now absolutely achievable.
