UBS notes media speculation suggesting multiple offers for Tabcorp Holdings with one of the consortiums interested in the entire business while the other is interested in the wagering business.
UBS believes the lottery business is better now with the last few years showing lottery revenue can grow above the usual 2-4% per annum average by tweaking the math behind it.
The broker also notes the business is protected through strong regulatory barriers and competition in the online reseller space is unlikely.
The Buy rating and $4.70 price target are unchanged.
Sector: Consumer Services.
Target price is $4.70.Current Price is $4.10. Difference: $0.60 – (brackets indicate current price is over target). If TAH meets the UBS target it will return approximately 13% (excluding dividends, fees and charges – negative figures indicate an expected loss).
