Flu zaps racing stocks
Published in The Courier Mail, August 2007
By Melissa Maugeri
RACING stocks are expected to make a slow break out of the barriers this morning as investors digest the implication of the equine flu.
Tabcorp Holdings, a quarter of whose income is from wagering, will be under most pressure after a three-day ban was declared on Australian horse racing.
But other gaming stocks, such as Tattersall's, are also expected to feel the impact of uncertainty about how long racing will be affected.
It is another blow for Tabcorp investors as shares fell more than 2 per cent to $15.83 after Tabcorp last week posted a net profit of $515.6 million, almost $20 million below some estimates.
Tabcorp has estimated betting turnover could be slashed by $150 million if racing does not resume until next weekend.
Analysts say uncertainty about the duration of the crisis could have a more profound effect.
Wealth Within chief analyst Dale Gillham said that if the horse flu crisis was only short-term there might be a dip in values early in the week but then things should settle.
``But if we are talking four, six or eight weeks, it could be more serious,'' Mr Gillham said.
Commsec gaming analyst Craig Shepherd said a cent or two could already be stripped from earnings for the year, but he did not expect a long-term impact on the stocks.
``Once the uncertainty is gone things should improve,'' Mr Shepherd said.
Fat Prophet's senior equity analyst Greg Canavan thinks earnings diversity will buffer Tattersall's from much of the impact.
Some analysts predict a 78 per cent rise to $246 million in Tattersall's full year net profit on Thursday.
