Citigroup downgraded Bally Technologies (BYI
) to sell from hold, citing share valuation.
Analyst Geoffrey Davis says that at Tuesday's close, shares were up 40% year to date on what he thinks is a combination of a turnaround, improved slot product, solid results from rival International Game Technology (IGT
), and other reasons. He believes International Game Technology warrants premium valuation to Bally based on International Game Technology's better game content, superior balance sheet, higher percentage of recurring revenue from its gaming operations, and dominant market share. For Bally, he cuts his 3 cents first quarter earnings per share (EPS) estimate to breakeven, his 40 cents fiscal year 2006 (ending June) EPS estimate to 31 cents EPS, and his 80 cents fiscal year 2007 EPS estimate to 67 cents EPS. He lowers his $15 stock price target to $12.