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Please note that tax, investment, pension and ISA rules can change and the information and any views contained in this article may now be inaccurate.
888 is not living up to expectations

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Please note that tax, investment, pension and ISA rules can change and the information and any views contained in this article may now be inaccurate.
Half-year results from 888 (888) showed like-for-like revenue growth of 7% to $277m, with the UK casino and sports betting business the standout performers, up 23% and 50% respectively, driving a 23% growth in UK revenue.
However, earnings before interest, tax, depreciation and amortisation fell 20% to $41.8m, largely driven by higher taxes in the UK where remote gaming duty increased from 15% to 21% as well as an increase in the rate of tax paid in Romania and Italy.
Poker was particularly disappointing, where revenue fell by 24% to $23.1m, due to increased competitor marketing activity.
Consensus expectations for profit has been revised down consistently since our ‘buy’ recommendation in June and the interim results will likely lead to more downward adjustments.
We knew that the legacy poker business-to-business interests were expected to drag on earnings for 2019, but the focus on consumer operations, particularly in casino, was expected to show rapid growth, as indicated at the capital markets day on 4 June.
Casino (63% of revenue) saw 14% constant currency growth in the first half, well short of the 45% we were expecting.
SHARES SAYS: Despite signs of improving operational performance and a maintained focus on efficiencies and cost control, the company has yet to convince investors that it can deliver on its strategic objectives.
We recommend taking profit and waiting for stronger evidence that 888 is on a sustainable growth path.
These articles are provided by Shares magazine which is published by AJ Bell Media, a part of AJ Bell. Shares is not written by AJ Bell.
Shares is provided for your general information and use and is not a personal recommendation to invest. It is not intended to be relied upon by you in making or not making any investment decisions. The investments referred to in these articles will not be suitable for all investors. If in doubt please seek appropriate independent financial advice.
Investors acting on the information in these articles do so at their own risk and AJ Bell Media and its staff do not accept liability for losses suffered by investors as a result of their investment decisions.
The value of your investments can go down as well as up and you may get back less than you originally invested. We don't offer advice, so it's important you understand the risks, if you're unsure please consult a suitably qualified financial adviser. Tax treatment depends on your individual circumstances and rules may change. Past performance is not a guide to future performance and some investments need to be held for the long term.
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