Amaya Target Price Now Reduced to Just $28

Despite Amaya owning PokerStars, the world’s largest online poker site, the Quebec-based company has had to endure a turbulent year in which the iPoker market has continued to stagnate. As a result, Canada’s biggest independent investment firm, Canaccord Genuity Group Inc, has now slashed Amaya’s target price from $42 to just $28.
While lower target prices can sometimes be seen as an attempt by financial firms to stimulate more market interest, in this instance it is more likely due to Canaccord’s assessment that the presently struggling online poker industry will ultimately result in less revenues for Amaya. This in itself is evident by Amaya’s attempts to introduce more non-poker related gambling games to PokerStars since acquiring the brand in 2014.
Commenting on the overall trend, Canaccord explained that its lower target price was not only due to the slower growth experienced by the poker industry, but also because of a “less optimistic perspective on the Canadian gaming sector, which has had a tough last twelve months.” In addition, there are a number of other factors which have also contributed to its reduced price target for Amaya. This includes David Baazov’s recent failed takeover bid sending Amaya’s shares lower, as well as increased uncertainty related to an outstading legal dispute in which the state of Kentucky is demanding $870 million for PokerStars’ flaunting of the UIGEA.
Nevertheless, Canaccord still gives Amaya a “buy” rating on account of its position as a global leader, and the scale of its operation. Advising investors to focus upon Amaya’s strong fundamentals, Canaccord warned that there could be an increased level of volatility during the last few days of 2016 as David Baaazov’s failed takeover bid is digested by the market. Dismissing short term fluctuations in the Canadian gaming sector, however, Canaccord said that Amaya will likely “deploy capital to deleverage as a means to surface value for equity holders.


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