Internet casino and poker room PartyGaming said a tactical split with partners this month had boosted poker growth, reassuring investors in its battered stock.
PartyGaming's highly volatile shares have more than halved in value since it warned in September its rapid growth was moderating.
But they gained 11.2 percent to reach 87 pence, after PartyGaming said it was comfortable with analysts' forecasts of 2005 revenues.
Shares in online gaming have swung wildly in recent weeks as investors struggle to identify the leaders in a sector valued at up to $12 billion (7 billion pounds) a year globally, where firms rake in hundreds of thousands of dollars every hour of the day.
"Since the end of September there has been a marked improvement in poker and casino," Chief Executive Richard Segal said as the firm posted a 32 percent lift in third-quarter revenues to $220 million.
And he said PartyGaming's partial split this month from partner websites like Empire Online had boosted revenues for its PartyPoker site by 10 percent.
"The pick-up post-split is in line with our expectations, and it's not even two weeks since the platform split occurred," Segal told Reuters.
"We have seen some players coming across... but we would expect a seasonal pick-up as we come into the longer winter months," he added.
SHORT-TERM RELIEF :
"This should provoke some relief and dispels the worst fears short-term," Citigroup analysts said in a research note, "We remain bullish that management have the tools to re-stimulate growth."
Citigroup gives the shares a fair-value estimate of 223 pence, and a price target of 160 pence a year from now, almost double their current price.
Analysts had expressed concern that the partial split this month from partners like Empire Online and Coral Eurobet, known as "skins", might hit poker revenues.
Empire warned on Tuesday the move would drag its 2005 net profit 10 percent below consensus estimates, knocking other online gaming stocks.
"Skin" sites act as a facade for PartyGaming's internet poker room, directing their own players there in return for a cut of profits.
"We think PartyGaming signups will have benefited from Empire and Coral customers leaving the inferior skins network, an improved seasonal trend in poker, and the new products on offer after the technology upgrade," said Matthew Gerard at Investec Securities.
PartyGaming's Segal said he was encouraged by the performance of two new games on his site, following the technology upgrade.
"The reaction of customers on blackjack and side bets has been extremely positive," he told Reuters. "It has been material and immediate."
PartyGaming said the overall number of customers, measured by total active player days, rose 53 percent year-on-year to 12.2 million in the third quarter of its financial year.
But third-quarter casino revenues fell 19 percent from second-quarter levels to $11 million.
Internet casino and poker room PartyGaming said a tactical split with partners this month had boosted poker growth, reassuring investors in its battered stock.