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Analyst's encouraging words send International Game Technology shares rising29 September 2008
By Howard Stutz
LAS VEGAS, Nevada -- Shares of slot machine maker International Game Technology, battered recently by a string of bad news, were given a lift Friday when a Wall Street analyst told investors there were several reasons to accumulate stock in the company.
The comments by Goldman Sachs gaming analyst Steven Kent boosted shares of IGT to a closing price of $18.44 on the New York Stock Exchange, up $1.71, or 10.22 percent. It was the biggest jump in more than two years.
In a note to investors, Kent said IGT shares were trading within the value of just one aspect of the Reno-based company's operations. He reiterated his "buy" recommendation on the company.
"IGT has been under pressure recently along with much of the gaming sector," Kent said. "Fear of fewer casino openings, (capital expenditure) cutbacks for machines and a delay in central server technology may be weighing on shares."
Kent said IGT expects to announce a restructuring plan before the end of the year that could return profit margins closer to the 30 percent range the company reported in 2007. He said the restructuring will include expense controls. He added that the company's recently announced plans for layoffs within IGT's 5,400-person work force was a good thing for the bottom line.
"IGT may need to be slimmed down for a more competitive and slower growth environment," Kent said.
Also, he expects IGT to get a boost when it showcases its newest products at the Global Gaming Expo in November. Meanwhile, new gaming markets could open as states deal with budget shortfalls and look for ways to increase tax revenues.
"After the past two recessions, several new states rolled out gaming," Kent said. "New markets opening may offset delays in casino expansions or replacements."
Earlier in the week, IGT's shares slumped to a six-year low on comments by Roth Capital gaming analyst Todd Eilers. He said his legal sources suggested the company may face an unfavorable ruling on certain patents in its pending lawsuit with Bally Technologies. However, nothing was ever unveiled. The case is expected to go trial in October in U.S. District Court in Las Vegas.
IGT's stock has traded in a 52-week range of $15.22 on Tuesday to $49.41 on Feb. 26.
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