Zacks Investment Research downgraded shares of Scientific Games Corporation (SGMS) from NEUTRAL to UNDERPERFORM on September 27, 2012, with a target price of $7.25.
Scientific Games reported dismal second quarter results due to higher expenses. Instant lottery sales declined in Italy and China, which remains a major headwind in the near term. We believe that the company's diversified product offerings, international development activities, recurring revenue business model and strong growth from the Internet-based business will drive the stock over the long term. Further, privatization and outsourcing of state lottery management is a major growth opportunity for Scientific Games going forward. However, we believe that the visibility regarding this privatization process remains murky, thereby adding significant uncertainty to the stock. Moreover, increasing investments for product development and cutthroat competition is expected to hurt profitability in the near term. We downgrade the stock from Neutral to Underperform and set a price target of $7.25.
Get all Zacks Research Reports and be alerted to fast-breaking buy and sell opportunities every trading day.
To get a free copy of the research report on Scientific Games Corporation (SGMS),
click here.
For more information about research offerings from Zacks Investment Research, visit
Zacks.com .
Be the first to comment