Janney Trims Fair Value on IGT (IGT) to $13 Following Company Update, Relignment

Janney Capital cuts its fair value estimate on International Game Technology (NYSE: IGT) from $15 down to $15 and maintains at Neutral rating on the stock following a realignment of the company announced on Tuesday night.

Analyst Brian McGill noted the following key points from IGT's subsequent conference call following the announcement:

• In the gaming operations business, management continues to blame GGR trends for the disappointing performance. We believe this is only part of the story. The install base has shifted into low yielding markets and premium games comprise a smaller percentage of the overall base. IGT also continues to lose share to other companies. Even if GGR in regional markets does improve, we do not think it will have a dramatic positive impact on revenues.
  
  
• We think the product sales segment will also remain challenged. There is a significant hole created due to the completion of sales into Canada. This is exacerbated by no growth in replacements and a lacking expansion pipeline. Competition has also increased as IGT game content has underperformed, resulting in lost market share and pressure on ASP and margins. The international segment has been underwhelming for several quarters and we do not anticipate trends will improve.
  
  
• At this point, it is difficult to find a positive catalyst that could move shares higher. The FCF and dividend yields are more attractive at these levels, but we think poor fundamentals are overshadowing them. There could be private equity interest but we think a deal could be more trouble than it is worth. While the monetization of Double Down is possible, it is difficult to ascertain a precise value of this business given that its SG&A expenses are unknown.

For an analyst ratings summary and ratings history on International Game Tech click here. For more ratings news on the company, click here.

International Game Tech closed at $14.85 yesterday.

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