CIBC Lowers GTech to Sector Perform
CIBC World downgraded GTech Holdings (GTK ) to sector perform from sector outperform.
A presiding judge in a civilian case in Brazil ordered 30% of payments due to GTech from lottery operator Caixa Economica Federal be withheld and deposited in a court-controlled account, pending adjudication. As a result, GTech, which operates lottery terminals, cut its second-quarter and fiscal 2005 guidance.
Analyst William Schmitt says this case is far from being resolved and could overhang on the shares for the next 12-to-18 months pending a resolution. He lowered the $3.10 fiscal 2005 (Feb) EPS estimate to $2.95, cut the $3.40 fiscal 2006 EPS estimate to $3.29, and trimmed the $71 target to $64.