The fall in Empire Online\’s share price suggests that the rumored acquisition bid by PartyGaming is appearing to be less and less likely.
In separate news, analysts at HSBC initiated coverage of PartyGaming with an \’overweight\’ rating and a price target of 122p.
HSBC noted that although the PartyGaming\’s share price has lost almost half of its value from its July high of 179p, the fall has been overdone.
“We expect continued growth from its current core market [US], benefits from the data mining project started this year and new game offerings will drive top-line growth,” wrote in a note Richard Wainwright, analyst at HSBC.
Wainwright believes the online gaming sector is now relatively undervalued versus its growth rates, but a good series of financial performances over a period of 12 months is needed for the market to regain confidence in the sector.
He also expects consolidation within the egaming sector to increase, with PartyGaming playing the role of “key consolidator.”
Evolution Securities retained its \’buy\’ rating and increased PartyGaming target to 110p from 105p. The broker said the fall in Empire Online\’s share price “suggests that PartyGaming continues to win back high value clients.” “Near term earnings risk is thus extremely low and the mid term growth story remains strong,” broker added.
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