Shares digital

Rank (RNK) 95p

Bingo trading has picked up but gaming group Rank is still negative on trading prospects for 2008. (Read the full story: www.sharesmagazine.com/node/3470)

Shares says: The Mecca bingo operation was the cause of several profit warnings over the past six months. Rank has struggled to survive in the post-smoking ban era and restrictions to gaming machine limits. The pension scheme has been sold, which eases financial matters to some extent, but it also firmly opens the door to a takeover. Casino earnings have fallen but Rank still plans to bid for a handful of the 16 new casinos proposed by the government. The online sports betting arm, Blue Square, is the only bit of the group keeping its head above water, but sport results haven’t been in Rank’s favour recently. You could argue that a recovery could be in sight, but only through industrial-strength binoculars. AVOID

The City - Evolution says: A little good news at Rank goes a long way. Current trading shows an improvement at Mecca – not a recovery yet but better than we had hoped for. We’re more confident that Rank will get through the nadir in trading without breaching its banking covenants. 2007 was a terrible year for Rank and it is not out of the woods yet but we’re confident that it is turning around. BUY

The City - Investec says: Bingo admissions have improved in the first eight weeks of 2008 (only down 13.6% against a 15% drop in September to December 2007), countering fears that bingo is in a terminal liquidity-induced decline. Unless the consumer environment deteriorates severely, impacting casinos, newsflow over the next three to six months should be more positive as management delivers on the turnaround strategy. HOLD