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ISEQ rally knocked by Paddy Power

Tuesday, May 13 13:11:08

The ISEQ dipped back in to the red this morning as Paddy Power's shares slumped after its CEO said he intends to resign.

By 1pm, the index was down 13.70 points to 4,882.62.

Share sin Paddy Power slumped 241c to E56.84. There are a number of notable features in this morning's trading statement from the bookie. All however are overshadowed by the news that CEO, Patrick Kennedy, intends to leave the group by April 2015. "Given the group's very impressive track record under his tenure, this is likely to lead to a period of uncertainty for investors with questions in relation to succession and the group's willingness and ability to pursue significant strategic opportunities in the interim period. Naturally, this may weigh on the stock for a period. It is now key that the group demonstrates superior execution in each of its markets as it enters what is likely to be a period of higher scrutiny," said Davy Research.

Ryanair's stocks fell 5c to E6.88. Ryanair will report FY2014 results on May 19th. Davy said it assumes net income of 510m (guidance 500-520m; consensus 515m). This includes a loss of -56.7m in the traditionally weak Q4 with yields down 8.3pc. More important will be the FY2015 guidance and cash generation, the broker said. "Despite the 484m in share buybacks last year and indications of a further 500m to be returned to shareholders through a mix of a special dividend and some limited buybacks by the end of FY2015 (bringing total funds returned to over 2.5bn since FY2008), we forecast that Ryanair will be in net cash by year-end. We currently assume flattish unit revenue growth (0.5pc) and net income of 643.9m (consensus: 634m) for FY2015. Ryanair's brand and digital strategy, which should be showing initial results (rising load factors), and relatively benign industry capacity (c.3pc) should be positive indicators; however, very limited winter visibility is likely to mean that Ryanair is cautious in its guidance."