Roth Lifts Alliance Gaming to 'Strong Buy'

Analyst Jeff Martin sees strong potential for market share gains in the slot and gaming software markets

Roth Capital upgraded Alliance Gaming (AGI ) to strong buy from buy.

The company posted 24 cents second quarter earnings per share. Analyst Jeff Martin says he was looking for 22 cents earnings per share. He notes the upside came from the Bally unit, which now accounts for 50% of total revenues, and 75% of EBITDA. Martin thinks Bally's recent progress is an indication of Alliance's ability to gain share of the slot and gaming software markets. He points out that regulatory approval for the company's ticket-in/ticket-out initiative is still pending, but he thinks additional market share gains will be facilitated upon approval .

Martin says Alliance's route and casino operations should stabilize, and the company should post moderate margin improvements in the second half of 2003. He upped his 85 cents fiscal 2003 (June) earnings per share estimate to 87 cents, and upped the $21 target to $22.

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