Gaming equipment giant International Game Technology has seen its stock price slip a bit after the company reported quarterly earnings more than a week ago.
Analysts aren’t dismayed.
Initial concern came after the company announced a complicated stock transaction by its majority shareholder in addition to political uncertainty in Italy, where IGT maintains a corporate headquarters and has a dependency on the Italian gaming and lottery business.
IGT’s shares were down more than 6 percent since last Thursday, but the trend reversed Wednesday. IGT closed at $26.26 on the New York Stock Exchange, up 62 cents or 2.42 percent.
Macquarie Securities gaming analyst Chad Beynon said in a research note the Italian government’s debt was around $44 billion in 2017, with a national debt to gross domestic product having one of the highest ratios in Europe, at 132 percent.
With Italy’s need for tax revenues, gaming will continue to be the answer, “despite political rhetoric calling for further regulation.”
IGT’s gaming and lottery businesses in Italy supplied the company with 34 percent of its overall revenue in the first quarter, as well as 39 percent of its cash flow.
“We expect shares to resume their upward trend as political headwinds fade and as each business continues moving in the right direction,” Beynon said.
Union Gaming analyst John DeCree wrote that the stock transaction involving De Agostini S.p.A., IGT’s largest shareholder, which placed 18 million shares on the market, most likely put pressure on the company’s stock.
He said deal, where an underwriter sold the shares at $28.25 per share, overshadowed the company quarterly earnings that beat analyst expectations.
“The lottery business … remained strong with North America lottery revenues up 5 percent up year-over-year and overall Italian lottery wagers up 8.5 percent, including a 17 percent increase in 10eLotto.”
For its part, the CEO of IGT’s largest shareholder the company was “fully committed to continue supporting IGT’s long-term development” and remain as its largest shareholder.
“De Agostini’s objective is to rebalance the profile of its portfolio of assets,” CEO Lorenzo Pellicioli said in a statement. “We are not contemplating any additional transaction involving IGT shares.”.
Howard Stutz is the executive editor of CDC Gaming. He can be reached at hstutz@cdcgamingreports.com. Follow @howardstutz on Twitter.
