Morgan Stanley has upgraded its rating for betting firm Betfair (LON:BET) - the world's biggest betting community - to "overweight".
The performance of the company since it listed as a public company in October last year has been troubled and the share price has gone from £13 last year when it floated to around 830 pence today.
It has also emerged in recent weeks that members of middle management have quit the firm and that its own polling had shown staff to be unsure about the firm's future direction.
In a research note today, investment bank Morgan Stanley, said it had upgraded the FTSE-250 company and given it a new price target of 1,150 pence - implying a 38 percent increase. Analyst Vaughan Lewis said: "We believe that the bad news since its (Betfair's) Oct 2010 listing is now well understood, and we see scope for outperformance from here due to a low valuation, a re-acceleration in growth as new products come online, cost cutting and potential surprises from new markets."
In a management statement on March 8 this year, Betfair gave key performance indicators for the its third quarter - ended 31 January 2011.
It said how from the next day (March 9) its Betting Exchange would operate under a Gibraltar licence. "In recent months, Betfair has undergone a period of significant restructuring and has now transferred the majority of the key systems for its Betting Exchange from the UK to Gibraltar and Dublin," it said in the statement.
It said: "The company expects a positive EBITDA impact from the restructuring resulting from gross profits tax savings, partially offset by higher operational costs arising from running both new and existing data centres in parallel. These additional operational costs will reduce as our portfolio of data centres is consolidated during FY12."
It added: "The company expects no material financial impact in the current financial year and a net EBITDA benefit of approximately £10m in FY12." CEO David Yu said the firm had made a good start to Q4 and was rolling out a planned series of major improvements to our sports betting product to drive revenue growth in Q4 and into FY12.
"We remain confident that we will deliver an outcome for the current financial year within the range of market expectations," he had said. Morgan Stanley summised today: "While headline multiples do not appear cheap, we think this is a reflection of Betfair’s business being in an investment phase, and sitting on a significant cash position."
The performance of the company since it listed as a public company in October last year has been troubled and the share price has gone from £13 last year when it floated to around 830 pence today.
It has also emerged in recent weeks that members of middle management have quit the firm and that its own polling had shown staff to be unsure about the firm's future direction.
In a research note today, investment bank Morgan Stanley, said it had upgraded the FTSE-250 company and given it a new price target of 1,150 pence - implying a 38 percent increase. Analyst Vaughan Lewis said: "We believe that the bad news since its (Betfair's) Oct 2010 listing is now well understood, and we see scope for outperformance from here due to a low valuation, a re-acceleration in growth as new products come online, cost cutting and potential surprises from new markets."
In a management statement on March 8 this year, Betfair gave key performance indicators for the its third quarter - ended 31 January 2011.
It said how from the next day (March 9) its Betting Exchange would operate under a Gibraltar licence. "In recent months, Betfair has undergone a period of significant restructuring and has now transferred the majority of the key systems for its Betting Exchange from the UK to Gibraltar and Dublin," it said in the statement.
It said: "The company expects a positive EBITDA impact from the restructuring resulting from gross profits tax savings, partially offset by higher operational costs arising from running both new and existing data centres in parallel. These additional operational costs will reduce as our portfolio of data centres is consolidated during FY12."
It added: "The company expects no material financial impact in the current financial year and a net EBITDA benefit of approximately £10m in FY12." CEO David Yu said the firm had made a good start to Q4 and was rolling out a planned series of major improvements to our sports betting product to drive revenue growth in Q4 and into FY12.
"We remain confident that we will deliver an outcome for the current financial year within the range of market expectations," he had said. Morgan Stanley summised today: "While headline multiples do not appear cheap, we think this is a reflection of Betfair’s business being in an investment phase, and sitting on a significant cash position."
