IGT Cloud Solutions Find More Takers - Analyst Blog

By Zacks | October 04, 2012 AAA

International Game Technology (IGT) will provide IGT Cloud solutions to Olympic Entertainment Group's properties, namely Olympic Jarve and Olympic Ulemiste. Olympic Entertainment had already deployed IGT Cloud in a casino at Estonia in March this year. Olympic Entertainment will leverage IGT's innovative and cost-efficient cloud-based gaming solutions to provide its customers an enriching casino experience. Deploying IGT Cloud in casino properties will not only give Olympic Entertainment access to IGT's vast gaming library, but also help to optimize its casino operations by using IGT's different casino management solutions and sbX Analytics.

The popularity of the IGT Cloud in the casino gaming industry is encouraging, as it is expected to improve IGT's top line.

Separately, IGT's DoubleDown Casino has met with enthusiasm from different casino operators. In recent months, the company has secured deals from Bonanza Casino, Hard Rock Hotel and Casino and Jacobs Entertainment.

Moreover, IGT recently ventured into Pennsylvania by providing 40 server-based gaming slots to The Meadows Racetrack and Casino. This expands IGT's reach in a relatively new market. IGT's business is also likely to benefit as more casinos in Pennsylvania start installing IGT's popular server-based games to attract clients.

However, we believe that the increasing investment in product development will drive up operating costs, which will remain an overhang on the stock in the near term. Moreover, fewer new openings and increased competition from Bally Technologies Inc. (BYI) and WMS Industries Inc. (WMS) will keep the stock range bound. Sluggish replacement sales is another headwind in the near term.

We have a Neutral recommendation on the stock over the long term (6-12 months). Currently, IGT carries a Zacks #4 Rank, which implies a Sell rating in the short term.

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