International Game Technology known as IGT to the online gambler, has had its third and fourth quarter forecast cut by Union Gaming. The move stems from a change in Italian gambling policies, the advertising of gambling and an increase in taxes on gambling machines.
In addition to the changes in Italy, Union Gaming said the move was influenced by a market correction which started in Macau and Las Vegas. Union Gaming’s statement explained: “much of the rerating started in Macau and Las Vegas and trickled down to regional gaming and the suppliers. While the Vegas Strip is a relatively small component of the overall slot industry, its health along with Macau does dictate the performance and investment decisions of some of the largest customers in the industry.”
IGT’s third-quarter earnings before interest, tax, depreciation and amortisation (EBITDA) was cut from US$436.4 million to US$406.8 million; and the fourth quarter cut amounts to US$10million.
Despite the cut, Union Gaming maintains that IGT shares are still a “buy”. In fact, Analyst John DeCree said: “even with lower estimates and less onerous target multiples, we see more than 20 per cent upside in the shares. We agree the sector warranted a rerating after sustaining record- high valuations for several months, but we believe the pendulum swung too far in the other direction. Shares of IGT are currently trading at about 6.5 times our 2018 EBITDA estimate of US$1.74 billion.”
Union Gaming Cuts IGT Predictions Despite IGT’s US Expansion
The news of the cuts broke last Friday despite IGT confirming their US expansion just last month. The gaming provider launched the country’s first ever cross-platform online Wide Area Progressive (WAP) product.
According to Enrico Drago, Senior Vice President for IGT “Launching the first cross-platform online WAP games in the US reinforces IGT’s commitment and leadership in delivering industry-first innovation that elevates the player experience across multiple channels.”
In addition to launching the WAP games, IGT has also signed deals with Mississippi Band of Choctaw Indians and acquired a sports betting license to offer services in West Virginia.
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