On Feb 19, 2014, Zacks Investment Research downgraded
International Game Technology (
to a Zacks Rank #5 (Strong Sell).
BALLY TECH INC (BYI): Free Stock Analysis
FACEBOOK INC-A (FB): Free Stock Analysis
INTL GAME TECH (IGT): Free Stock Analysis
ZYNGA INC (ZNGA): Free Stock Analysis Report
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Why the Downgrade?
IGT reported disappointing first-quarter 2014 results, which
missed the Zacks Consensus Estimate on both the lines. Earnings
per share declined 13.4% from the year-ago quarter and 17.9%
Revenues increased 2.1% year over year but declined 14.4%
sequentially to $541.2 million. Operating margin contracted 300
basis points (bps) from the year-ago quarter and 50 bps from the
previous quarter to 22.9%, due to higher operating expenses.
Double Down was one of the top-playing social gaming apps on
at the end of 2013.
IGT noted that declining gross gaming revenue trends mostly in
the gaming operations will continue to remain a major headwind in
2014. For fiscal 2014, IGT expects earnings to be at the
lower-end of the guided range of $1.28 to $1.38 per share.
IGT's weak outlook will remain an overhang on the stock, going
forward. We believe increasing investment in product development
will increase operating costs. This will negatively impact
profitability in the near term.
Double Down is expected to grow strongly due to improving
customer engagement, higher mobile revenues, international
expansion and innovative product pipeline. Management also noted
that Asia is well positioned to grow over the next 2-3 years.
The Zacks Consensus Estimate for IGT's second-quarter 2014
declined 6.5% (couple of cents) to 29 cents over the last 60
The Zacks Consensus Estimate for 2014 decreased 7.8% (10 cents)
to $1.18 per share over the last 60 days. The Zacks Consensus
Estimate for 2015 dropped 7.2% (10 cents) to $1.28 per share over
the same period.
Other Stocks to Consider
Other players in the industry, which look attractive at current
Zynga Inc. (
Bally Technologies (
. Both the stocks sport a Zacks Rank #1 (Strong Buy).