Sector Snap: Casino Equipment Makers

NEW YORK (AP) — A Goldman Sachs analyst raised the price targets of International Game Technology, WMS Industries Inc. and Bally Technologies Inc. Wednesday, citing new gaming legislation and the likelihood that replacement sales will climb.

It is the second time in just over a month that Steven Kent has increased the price targets of the three companies. In late July he boosted them on his replacement sale and gaming legislation views as well as recent earnings results.

In his latest client note, Kent says he expects casino operators to have bigger budgets for 2010 — which would give them the potential funds for more of their machines to be replaced.

"Many of the casinos in 2009 were given either a very small budget, or, in some cases, zero budget for buying new machines," he wrote. "The pent-up demand for new replacement machines may be greater than investors expect."

Kent also anticipates that new legislation in Illinois and Ohio will bring an additional 40,000 to 95,000 new slot machines, and predicts states like Massachusetts and Kentucky will look to pass measures that would permit additional gaming machine installations.