PartyGaming Shares Bounce after Strong Q3

Shares in online gambling group PartyGaming climbed sharply on news the company had a better-than-expected third quarter, driven largely by growth in their online casino division.

Q3 revenue was up 24% on last year to $115.7 million, driven largely by increased casino revenue after Party Poker revenue (which traditionally accounts for the majority of PartyGaming profits) was down 3% to $76.9 million compared with Q3 2006.

But Party Casino delivered an unexpected boost for the struggling company, with casino revenue increasing 158% to $36.7 million compared with last year.

Sports betting revenue was almost doubled to $4.2 million from $2.2 million in Q3 2006 but this was partly due to the increased revenue from large sporting events during the quarter.

The PartyGaming trading update noted that distribution costs will be toward the bottom end of its previously forecast range of 43-45% of revenue. Deutsche Bank analyst Jon Tarasewicz said this should reassure investors that the marketing environment isn't deteriorating:
"The strength of current trading and the continued development pipeline give us increased confidence that our 2008 forecasts should be achievable, and we reiterate our buy recommendation on the stock."

Shares in PartyGaming (LSE: PRTY) were traded furiously after news of the released results circulated. The SP closed at 31.25 at end of trading Thursday.

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