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Davy Stockbrokers declared Paddy Power’s share price to be overvalued

Financial analyst Davy Stockbrokers has rated shares in Irish bookmaker Paddy Power as “overvalued” due to the “competitive and tax-related headwinds” that the group is likely to face in the medium-term.

Davy said that in releasing its interim results tomorrow, Paddy Power is likely to focus on earnings before interest and tax margin progression – particularly on underlying rates of cost growth in its online business, according to the Irish Independent newspaper.

A progress report from Paddy Power’s emerging Italian business is also expected to show growth in market share.

However, Davy’s opinion of the share price remains unchanged from the view it published last April.

“Despite recent relative share price weakness, our overall stock view remains unchanged,” Davy said. “While the quality of the group is unquestioned and near-term earnings growth will remain robust, we do not believe that the current valuation fully reflects the competitive and tax-related headwinds facing the group.”

Meanwhile, Paddy Power has moved to mark the achievement of gaining one million fans on social media website Facebook by launching a new promotion.

Under the campaign, one punter will be given the chance to become the first person to place a bet from outer space and possibly win £1 million.

A helium balloon, complete radio transmitter and computer, will be launched into space – allowing the selected winner to place their bet from the ground.

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