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TheStreet Open House

How Will Bally Technologies (BYI) Stock Respond To These Analyst Actions?

NEW YORK (TheStreet) -- Shares of Bally Technologies Inc.  (BYI) are up 1.03% to $78.50 in pre-market trading after the gaming technology company was upgraded to "neutral" from "sell" with a price target of $70, up from $57, at Goldman Sachs (GS) today.

Bally Technologies was also downgraded to "market perform" from "outperform" with a lower price target of $83 from $85 at BMO Capital.

Analysts at BMO cited the proposed acquisition price in the company's recent merger with Scientific Games (SGMS).

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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 some important positives, 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 robust revenue growth, expanding profit margins and notable return on equity. 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 greatly exceeded the industry average of 5.9%. Since the same quarter one year prior, revenues rose by 30.6%. 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.
  • BALLY TECHNOLOGIES INC's earnings per share declined by 24.7% 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 ($4.35 versus $3.45).
  • The gross profit margin for BALLY TECHNOLOGIES INC is rather high; currently it is at 69.90%. Regardless of BYI's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 8.10% trails the industry average.
  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. 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.
  • Reflecting the weaknesses we have cited, including the decline in the company's earnings per share, BYI has underperformed the S&P 500 Index, declining 16.06% from its price level of one year ago. Looking ahead, although the push and pull of the overall market trend could certainly make a critical difference, we do not see any strong reason stemming from the company's fundamentals that would cause a continuation of last year's decline. In fact, the stock is now selling for less than others in its industry in relation to its current earnings.
  • You can view the full analysis from the report here: BYI Ratings Report
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