International Game Tech.IGT

Morningstar Rating

Stock Research and Analysis

by Bradley Meeks

International Game Technology enjoys dominant market share in the slot machine manufacturing industry. This wide-moat firm benefits from its significant product-development investment, natural barriers to entry in the form of regulatory requirements, and economies of scale. Read more

Bulls Say

Legislative actions and the passage of voter referendums are providing new and expanding opportunities in Florida, Pennsylvania, Kansas, Indiana, Washington, and California. Several other states, including Maryland, Massachusetts, Illinois, and Texas, could provide further opportunities.

Continued gaming growth in Macau, the surrounding region (such as Singapore, Vietnam, Taiwan, South Korea, and Cambodia, which could implement further gaming expansion and development), and Latin America should help IGT's growth prospects.

IGT has an expansive collection of strong-performing games and a wealth of patents that constitute an extensive intellectual property portfolio.

Server-based technology could revolutionize the gaming environment and be wildly profitable by differentiating IGT's platform as a new way to engage and interact with players and to provide appeal to player preferences.

IGT was chosen to install a server-based network in CityCenter, MGM Mirage's MGM new $8 billion megacasino on the Las Vegas Strip. As other new properties also install this technology, older casinos also will be forced to, likely spurring a period of strong growth for IGT. Read more

Bears Say

IGT's ability to operate in existing markets or expand into new markets could be adversely affected by changing regulations or problems with obtaining needed licenses. This could hinder growth opportunities.

Slow growth in the number of new casinos or the replacement rate of existing gaming machines could limit or reduce profits.

Demand for products could be adversely affected by the whims of players and operators.

Failure to protect valuable intellectual property or create innovative new products could affect profitability. Read more

Strategy

IGT is expanding domestically (Florida, Pennsylvania, Kansas, Indiana, Washington, and California) and internationally (Macau and the Far East). IGT has said it would like to expand in these regions and retain its market share. Read more

Management

Former IGT director Patti S. Hart took the reins as CEO in 2009 after former long-standing CEO Thomas "TJ" Matthews resigned. Matthews has been with IGT since 2001 and continues in his role as chairman, assisting Hart in strategic planning. The announcement of a change in leadership happened rather abruptly; however, it doesn't come as a complete surprise based on the company's crumbling fundamentals and recent stock price performance. Read more

Profile

International Game Technology designs and manufactures computerized gaming equipment, network systems, and licensing and services for the casino gaming industry. IGT derives its revenue from selling electronic gaming equipment and network systems, and licensing intellectual property. Read more

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