). A global provider of instant tickets and services for lottery and pari-mutuel outfits, Scientific is still not on institutional investors' radar screens. Yet the stock was a knockout last year, soaring from 2 in April, 2001, to 5 in July--and to 8.18 by Jan. 23. The company, formerly Autotote, changed its name after it acquired Scientific Games two years ago. With Scientific's lottery knowhow and Autotote's tech skills, "the combined company has an impressive growth story," says Joyce Minor of Lehman Brothers, who rates the stock a strong buy. She sees Scientific turning profitable soon, earning 31 cents a share in 2002 and 37 cents in 2003. The estimates may be conservative, says Minor, if Scientific keeps winning contracts in the U.S. and overseas. It has won on five of seven bids it has made since the merger, including contracts in Vermont and South Carolina. Sales are expected to rise to $481 million in 2002 and to $492.5 million in 2003. Scientific has 68% of the U.S. lottery market, operating in 28 of the 39 jurisdictions where lottery is legal and in 61 foreign countries. And it supplies wagering systems at racetracks worldwide. CEO Lorne Weil says Web and phone bets in racetracks are rising fast.
But there is more than just earnings to Scientific's appeal: Some pros say Scientific is an enticing buyout: "Its niche position in lottery and pari-mutuel makes it a compelling target," says Robert Olstein of Olstein Financial Alert Fund, which manages $1 billion. Publisher D'Agostini of Italy, where Scientific operates lotteries, is buying Olivetti's 30% stake in Scientific. Other sources say another company may buy a big stake. CEO Weil declined to comment on the buyout or stock purchase speculation. By Gene G. Marcial