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Goldman Sachs bullish on shares

Tuesday, Nov. 6, 2001 | 9:58 a.m.

Goldman Sachs gaming analyst Steven Kent initiated coverage of Alliance Gaming Corp. at "market outperform."

Kent's $23 price target is a 17 percent premium over current levels.

In a research note, Kent said the company was attractive both for its rapidly growing, highly profitable slot machine business, and the "annuity type cash flows" from its slot routes and casinos in Nevada and Mississippi.

Kent also noted that the stock trades at a far lower multiple of price to expected 2002 cash flow than International Game Technology, the gaming industry's largest slot maker. Kent expects this multiple to rise as slots become a bigger portion of Alliance's cash flow.

"In addition to (earnings per share) growth, multiple expansion should push the shares higher, as the high profit, high multiple slot business becomes a greater portion of (cash flow)," Kent wrote.

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