Analyst Harry Curtis says there's more pent-up demand for the gaming machine maker's new machines than he initially forecast. He says a large number of upgrades to the estimated 50,000 machines that are currently installed will come from replacements, rather than retrofits, as most units have exceeded their depreciable life.
Curtis sees this as an earnings catalyst since replacements command nearly double the average selling price of conversions. He sees new orders impacting earnings per share earlier than expected, starting in the second quarter. Curtis upgraded the 10 cents fiscal 2004 (June) earnings per share estimate to 35 cents, and raised the 92 cents fiscal 2005 earnings per share estimate to $1.28.
Also, Curtis raised his $24 target to $28.50. He maintains his overweight rating.