International Game Technology rises on strong 4Q

Associated Press

NEW YORK (AP) — Shares of International Game Technology posted some of the market's biggest gains Friday, after the company reported fiscal fourth-quarter results and a profit prediction for the new year that were both better than expected.

THE SPARK: The Las Vegas-based company, which sells gambling equipment and services, late Thursday reported fourth-quarter net income of $88.1 million, or 33 cents per share. Excluding one-time charges, it earned 38 cents per share.

Total revenue rose 17 percent to $631.1 million.

Analysts polled by FactSet expected an adjusted profit of 32 cents per share on $587.7 million in revenue.

The company also projected a fiscal 2013 profit from continuing operations of $1.20 to $1.30 per share, ahead of average analysts' expectations of $1.18 cents per share.

THE BIG PICTURE: International Game Technology, which also provides online gaming in addition to casino equipment, said the recent quarter's sales got a boost from a 52 percent jump in North American machine revenue.

In addition, its average machine sale price in North America rose 4 percent to $14,700, as the company relied less on sales promotions. Sales of replacement units in North America jumped 67 percent.

THE ANALYSIS: Janney Capital Markets analyst Brian McGill backed his "Buy" rating for the company, pointing to its strong replacement sales and average sale price. While revenue from gaming operations fell slightly, profitability at the business improved, he said.

"This was an impressive quarter for International Game Technology and adds further support to our thesis that trends in the equipment space are better than many realize," McGill wrote in a note to investors.

The analyst added that he expects the company's sale prices to continue to hold up and for the replacement market to improve.

But Roth Capital Partners analyst Todd Eilers kept his rating at "Neutral," saying that the gaming operations business remains a concern. He predicted that increased competition will continue to pressure the company's gaming operations for the next several quarters before stabilizing in the second half of next year.

THE SHARES: Up 80 cents, or 6 percent, to $13.63 in morning trading, after peaking at $13.85 earlier in the session. Over the past 52 weeks, the company's shares have traded between $10.92 and $18.10.

Since the beginning of this year, the shares have fallen about 25 percent.