London broker Daniel Stewart & Company reiterated its 'hold' rating and 225p target price for High Street bookie Ladbrokes on Monday but gave sounded an optimistic tone about the firm's intention to improve its Digital division.

Ladbrokes has unveiled plans to extend its relationship with gaming software company Playtech as part of the former's 're-invigoration' of its Digital business.

Ladbrokes will create a new e-commerce and digital marketing services operation, to be integrated with the company's existing Digital teams in London and Gibraltar, to enable it to make full use of Digital-focused advisory services provided by Playtech. Playtech will also give Ladbrokes access to its full product suite and technology, which will see the launch of a new 'Vegas' tab on Ladbrokes.com.

With Playtech set to receive fees if profits improve at Ladbrokes' Digital, Daniel Stewart analyst Michael Campbell said that the deal "has the makings of a joint venture in our view".

He said: "In our view, this could signal the change in fortunes for LAD Digital business however it is too early at this stage to tell what the economic benefits will be for the Digital business from the agreement.

"However PTEC has success in the area of driving online traffic to sites in particular so we wait to see what trading results transpire for LAD Digital over the following quarters."

Shares in Ladbrokes reacted positively to the deal on Monday, up 7.2% at 241.5p in mid-afternoon trade.

BC

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