Ireland’s largest stockbrokers, Davy Stockbrokers, have announced that the newly merged Paddy Power Betfair looks on course for a 16 percent rise in revenue to €1.09 billion in 2016. The betting giant is also expected to soon become debt free and projections for the next two years are expected at 10 percent and 8 percent rises in revenue.
Paddy Power Betfair recently announced the slashing of 300 jobs from its Dublin offices as a cost-cutting measure. The company is now expected to boost its online sales by 16 percent and its share price target for the company has been raised from €129 to €137.
“We believe that the profit margin progress made at Betfair and Paddy Power over the last two years suggests that there is good potential for the merged group to deliver earnings upgrades into the future,” stated Davy Stockbrokers’ leisure analysts, David Jennings and Robert Stokes.
If the company does not find other businesses to purchase, it is likely to have in excess of €696 million on “its balance sheet by the end of 2018.”
The stockbrokers expect the merged group to expand internationally, especially as more markets become regulated over the coming years. Their International businesses are expected to increase in the coming year with Australian sales expected to grow by 22 percent, US sales expected to grow by 6 percent and their UK and Irish retail betting business expected to grow by 2 percent by the end of this year.
It is Paddy Power Betfair’s retail business that is the most uncertain as regulatory requirements for gaming machines in the UK are unclear. However, the analysts claim that the cost savings target for the merged company of £50 million (€63.3 million) in the first three years is definitely achievable.