Shares digital

888 Holdings (888) 149.75p

The online gaming group has confirmed a full recovery since closing its US operations in 2006 after reporting a 36% rise net gaming revenue in the past year. (Read the full story: www.sharesmagazine.com/node/3216)

Shares says: The company has kept its head down and successfully reshaped operations following the significant set back to the online gaming industry in 2006. The expansion into sports betting is a natural development and gives 888 a more diversified earnings stream. It is generating good levels of cash and finding extra ways to make money through partnerships. Pacific Poker is one of the strongest gaming brands, which will stand 888 well in a competitive environment. BUY

FT says: An outlook including a new sports betting site, plus more strategic partnerships, new casino games and technological upgrades demonstrate a company moving beyond post-US recovery mode. Bingo is showing strong growth, and the regulatory outlook across Europe will evolve in the sector’s favour. A forward PE of about 15 times may be at a premium to peers, but few analysts would bet against it increasing its value.

The Independent says: The company is trying to widen its appeal so that it attracts not just hard core gamblers but people seeking wider community-style entertainment. After the US clampdown, 888 attracted bid attention from Ladbrokes but no deal emerged. Consolidation among the gaming operators is still highly likely.

The City - Daniel Stewart says: Earnings were ahead of expectations. We are moving our full-year 2008 earnings estimate up from 16.99c to 17.67c. Based on this 4% increase, as well as risks on the upside to our earnings (particularly given the launch of white-label agreement and new products like live casino), we raise target price from 139p to 155p. BUY