Industry News
Kent said if an economic downturn occurs, gaming equipment companies should benefit as individual states enact or expand gaming operations, which would force neighboring states to expand gaming as well.
The analyst also raised his price targets on International Game Technology to $48 from $46 and WMS Industries Inc. to $36 from $26. He lifted his price target on Bally Technologies to $42 from $25. And he also lifted his 2008 and 2009 earnings estimates for the three companies.
Here's how some gaming equipment that Goldman Sachs follows performed on Wednesday:
* Bally Technologies dropped 4 cents to $37.85.
* International Game Technology declined 34 cents to $43.11.
* WMS Industries dropped 67 cents to $33.04.
* Scientific Games Corp. declined 56 cents to $37.87
The report comes amidst changes in how Goldman Sachs, and the rest of Wall Street, does business.
Goldman is transferring about half of its principal-strategies trading team to its investment unit from its investment bank. Another major firm considered moving its quantitative stock trading desk, which uses computer models to exploit discrepancies in the prices of similar securities, to its asset-management arm.
This will give the firms greater leverage when trading gaming and other high-flying stocks.
As parts of investment-management units, these trading platforms are in strong positions to raise additional funds from third parties. That should generate fees, and demands for capital no longer would compete with those from other parts of the securities business. That will give traders more flexibility during market routs, when they might be forced to shed positions to create liquidity.
Goldman's move has an additional advantage, as its stock-arbitrage desk may find it has more freedom to invest in companies involved in mergers or acquisitions that were once off limits because of the investment bank's activities as the world's top M&A adviser.
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