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The Expert View: Ashmore, Workspace, Restaurant Group
by Chris Marshall on Sep 23, 2013 at 05:01
Oz raises stakes for Paddy Power & William Hill
William Hill (WMH.L) and Paddy Power (PAP.L) look best placed among bookies to grow market share in the UK market, while they’re also making inroads into the key markets of Australia and Italy, noted Morgan Stanley analysts as they revised their outlook on the stocks.
The Morgan Stanley team say investors should now be ‘equal-weight’ on Paddy Power, while they reiterated their ‘over-weight’ rating on William Hill: the former has the ‘strongest growth profile and balance sheet’, but the latter is cheaper for investors.
‘We expect the UK online market to be the main driver of the stocks in the next two years. William Hill and Paddy Power look best placed to grow market share supporting high multiples,’ they said.
Long-term, international expansion will also be important, particularly into Oz: ‘Paddy Power and William Hill have built No. 1 and 2 positions in Australia through acquisition. This is an attractive market with high growth potential, high barriers to entry and concentrated market shares.
William Hill ended Friday trade up 0.7% to 422p, while Paddy Power dropped 0.8% to €60.
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