NEW YORK (AP) -- There's a chance that International Game Technology, the world's largest slot-machine maker, will have higher costs and lower stock buybacks in the future, an analyst said Friday. As he downgraded the stock to "Neutral" from "Buy," the shares dropped by 6 percent.
THE SPARK: Janney Capital Markets analyst Brian McGill also said the stock is not cheap enough anymore to be a good deal. It has risen 42 percent since the beginning of the year.
THE BIG PICTURE: As the economy recovers, the casino industry has been strengthening. IGT said in April that its North American slot sales have helped drive strong revenue increases.
THE ANALYSIS: McGill said there were risks to game sales and the potential for higher costs and lower stock buybacks. He said the outlook is even more challenging now than it was a year ago, when the stock was worth half of what it is now.
Looking forward, McGill said competitors are poised to begin taking market share from IGT beginning in fiscal 2014.
SHARE ACTION: Down $1.39, or 6.9 percent, to $18.78 in afternoon trading. The stock has traded between $10.92 and $20.25 over the past 52 weeks.
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