Bally Technologies shares down after weak outlook
Shares of Bally Technologies Inc. were down more than 14 percent Friday after the slot machine manufacturer issued a weak earnings outlook due to a struggling casino games industry. The cautious outlook promoted at least one analyst to down grade the stock.
Joseph Greff, of JP Morgan Securities, cut Bally Technologies to "neutral" from "overweight," saying the company was not seeing an increase in demand for replacement slot machines.
"A lack of new market opportunities and increased competition" from International Game Technology and Japan's Konami also contributed to Graff's downgrade.
The Las Vegas-based maker of games and software for casinos has been struggling over the past two years as slot machines sales have declined, with resorts cautious about spending in the wake of a recession that has forced a number of gaming companies into bankruptcy.
"After a quarter characterized by strong levels in several key business segments, we believe management's fiscal outlook is a bit timid but perhaps justifiable given the past challenges meeting expectations," said David Katz an analyst with Jefferies & Co. Inc.
On Thursday, Bally's forecast first quarter and full year 2012 earnings that could fall short of analysts expectations.
The company expects to earn 40 cents a share in the first quarter ended Sept. 30, while for the fiscal year 2012, it expects earnings of $2.15 a share.
Analysts surveyed by Yahoo Finance expected 53 cents and $2.59, respectively.
"That said, we believe that Bally's unique strategic position relative to its competitors suggests meaningful upside in the second half of fiscal year 2012 as Bally's continues to gain product momentum and well defined opportunities come online," Katz said.
Katz on Friday reiterated his "buy" rating.
Bally shares were down $5.11, or 14.5 percent, to $30.13 on heavy volume of 2.04 million traded midday on the New York Stock Exchange. The company's average daily volume was 641,102 over the past 30 days.
Contact reporter Chris Sieroty at csieroty@reviewjournal.com or 702-477-3893.
