Companies: ARE    SPO    UKB   

Sports results have turned on the bookmakers, claims Paul Leyland at Seymour Pierce. A bad run hit racing and football payouts, with punters enjoying a 36 per cent return rate in July and August compared to 30 per cent in May. Leyland points out that one bookie claimed the football season to be 'the worst in memory'. Because of this, the broker is not upgrading any profit estimates of the betting stocks, though it expects conditions will 'normalise' in the fourth quarter.

One stock that is progressing is Arena Leisure. The racecourse operator and partner in media venture At The Races 2, which operates a dedicated freely available racing channel, has signed another course to ATR2 and has entered an agreement to manage the Doncaster course. Its interim results saw pre-tax losses reduce 88 per cent to £200,000 and EBITDA for 2004 will move into the black at £20 million. SP gives this stock an outperform rating.

Two other stocks SP is bullish about are Sportech and ukbetting. The former operates Littlewoods pools but also has a deal with ITV to provide interactive betting and games for sports and even TV shows. With pre-tax profits for 2004 estimated at £11.1 million and a prospective p/e of just 7.4, Leyland rates this a buy. The broker anticipates the sports content portfolio of ukbetting should become a profit centre in its own right and generate customers for betting. The business also operates online gaming. Predicted sustainable profitability, with pre-tax profits expected to rise from £400,000 in 2004 to £1.7 million in 2005, provides enough confidence for SP to rate the stock as another to outperform.