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Will This Downgrade Hurt Bally Technologies (BYI) Today?

NEW YORK (TheStreet) -- Bally Technologies (BYI) has been downgraded to "sell" from "neutral" with a $62 price target, Goldman Sachs said Thursday. The firm said product momentum is slowing and the industry is facing headwinds.

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Separately, TheStreet Ratings team rates BALLY TECHNOLOGIES INC as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:

"We rate BALLY TECHNOLOGIES INC (BYI) a BUY. This is driven by a few notable strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, notable return on equity, solid stock price performance, good cash flow from operations and expanding profit margins. We feel these strengths outweigh the fact that the company has had sub par growth in net income."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The revenue growth came in higher than the industry average of 5.6%. Since the same quarter one year prior, revenues rose by 19.6%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • Compared to its closing price of one year ago, BYI's share price has jumped by 34.87%, exceeding the performance of the broader market during that same time frame. Regarding the stock's future course, although almost any stock can fall in a broad market decline, BYI should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. Compared to other companies in the Hotels, Restaurants & Leisure industry and the overall market, BALLY TECHNOLOGIES INC's return on equity significantly exceeds that of both the industry average and the S&P 500.
  • Net operating cash flow has slightly increased to $30.73 million or 1.94% when compared to the same quarter last year. In addition, BALLY TECHNOLOGIES INC has also vastly surpassed the industry average cash flow growth rate of -51.95%.
  • BALLY TECHNOLOGIES INC's earnings per share declined by 32.5% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, BALLY TECHNOLOGIES INC increased its bottom line by earning $3.45 versus $2.27 in the prior year. This year, the market expects an improvement in earnings ($4.39 versus $3.45).

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