Wall Street Sees Jackpot in Slot Machines
Investors are hot for slots again.
Shares of casino slot machine makers International Game Technology and Anchor Gaming have recently reached their highest levels in years amid booming sales of models with flashy, computer-generated graphics.
On Thursday, Anchor Gaming’s stock (ticker symbol: SLOT) jumped $4.69 to $66.69, highest since mid-1998, after brokerage Lehman Bros. raised its price target for the stock to $83 from $78 and reiterated its buy rating.
International Game (IGT) eased 63 cents to $29.31 on Thursday. It is trading just under a six-year high of $30.13 reached in late July.
Anchor Gaming said Wednesday that net income in its fiscal fourth quarter ended June 30 rose 48% from a year earlier, to $17.9 million, or $1.54 a share. Revenue rose 16% to $142 million.
Analysts recently have raised their earnings projections for both companies as they sell more machines such as Video Wheel of Fortune, produced in a joint venture between International Game and Anchor. The machine features images and sounds from the popular TV game show.
Both companies also are selling more slot machines in California, which is allowing an expansion of casinos owned by Native American tribes.
“If you look at what’s going on in casinos right now, the driver of the casino has become the slot machine,” said Ralph Wanger, fund manager at Wanger Asset Management in Chicago. “What these guys have done is taken the power of the computer and used it as an entertainment device in a very powerful, seductive way.”
Wanger owns shares of both Reno-based International Game and Las Vegas-based Anchor.
Anchor attributed its latest profit surge to more placements of the Video Wheel of Fortune machines, placement of slot machines at Anchor’s Sunland Park Racetrack & Casino in Sunland Park, N.M., and sales of systems to operate government lotteries in China and the Caribbean.
Anchor went into the lottery business and took over the Sunland Park racetrack when it bought Powerhouse Technologies Inc. in June 1999 for $290 million.
Anchor is expected to earn $5.96 a share in the fiscal year ending next June 30, according to analyst estimates tracked by Zacks Investment Research.
International Game is expected to earn $1.64 a share in the year ending Sept. 30 and $1.91 next year.
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Lucky-Seven Stock?
Shares of slot machine maker International Game Technology (ticker symbol: IGT) have surged this year to their highest level since the mid-1990s, amid optimism over flashy new machines.
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Quarterly closes and latest for
International Game Technology
on the New York Stock Exchange
Thursday: $29.31
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Source: Bloomberg News
