Company’s stock upgrades

Friday, July 20, 2001 | 10:59 a.m.

Robertson Stephens gaming analyst Harry Curtis upgraded International Game Technology this morning, saying investors should use weakness in the stock price to acquire more IGT shares.

Curtis raised IGT to "strong buy" from "buy." He gave the stock a 12-month price target of $75, a 40 percent premium over current levels.

IGT reported a 50 percent increase in second-quarter net income Thursday, and beat analyst expectations by 3 cents per share. However, the stock still fell $3.85 to $53.50, as investors had grown used to IGT beating earnings estimates by larger margins, and earnings growth rates exceeding 100 percent.

Curtis, however, noted that IGT should post annual earnings growth of 20 percent or more through 2003, "strong momentum by any measure."

"It has been argued that IGT's growth is slowing because the magnitude of the company's earnings surprise is dwindling," Curtis wrote. "We believe earnings surprises are more a function of Wall Street's inability to accurately model a company. ... The issue is not sustainability of IGT's recent 100 percent growth rate ... rather, it is IGT's projected sustainable growth rate over the next several years."

IGT continued to retreat this morning, falling 27 cents to $53.23.