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Analyst Upgrades International Game Technology's Stock to 'Buy'

17 April 2000

Jason Ader, senior analyst at Bear Stearns, has changed his rating on stock in International Game Technology to "Buy" from "Neutral." IGT is the world's largest manufacturer of slot machines.

In a report issued Friday morning, Ader said IGT "is poised for a breakout given its improving fundamentals in the video market segment, its growing order backlog for games in California, its new EZ Pay ticket system, and the company's continued aggressive share repurchase program."

The stock had suffered, Ader said, in part because competitors beat IGT to the punch in the video slot market. But the company's new video slot games - such as Dick Clark's New Year's Rockin' Eve, I Dream of Jeannie and video Wheel of Fortune - should help it recover lost ground.

Last month's election in California, in which voters approved legal changes that will greatly expand tribal gaming, will help manufacturers like IGT. The state's Indian casinos are expected to buy or lease at least 44,000 slot machines.

Ader said IGT's EZ Pay ticket system, a coin-less system for slot play, could prove popular in California. EZ Pay is being tested at the Fiesta casino in Las Vegas. It not only prints out tickets for winning slot players, it enables those tickets to be inserted into another machine for play.

One risk to such a system, however, is the potential for compatibility problems with other companies' slots and central control systems, Ader said.

The analyst calculated an "asset value" of $28 to $30 a share for IGT. Shares were trading at just under $22 this afternoon.

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