International Game Technology

(IGT) - Get Report

shares gained 3.9% on Wednesday after the slot machine maker reaffirmed earnings guidance for the rest of the year, assuaging investor fears that its growth story has gone off track.

In a press release, the company announced that it remains comfortable with the current analyst earnings estimate of $1.32 in fiscal 2004 and said that earnings would grow by 15% in 2005. The affirmation of guidance helped quell fears that growth in the gaming equipment space has topped out -- a view that has been picking up steam since rival

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Alliance Gaming

(AGI) - Get Report

issued an earnings warning a week ago.

Also, IGT is making some balance sheet changes to fuel expansion going forward. The company announced that it will be redeeming $570 million in senior notes at 8.4%. IGT said it is in the process of terminating a $260 million credit facility to arrange a new $1 billion one with a five-year term comprised of an $800 million line of credit and a $200 million loan.

The company also announced a dividend of 10 cents a share payable on July 13 to shareholders of record as of June 29 and said it would consider raising the dividend further at its annual meeting in September.

In reaction to the news, shares of IGT rose $1.30 to $34.75, reversing a two-month trend.

Shares of red-hot IGT have lost nearly 30% since April 21, as investors grow more pessimistic about the company's future growth. The expected expansion of gaming in the U.K. -- a potentially Las Vegas-sized market opportunity for IGT -- has hit delays and may be smaller than expected, while the ongoing U.S. expansion, most notably in Pennsylvania, is not quite a sure thing.

But a large number of brokerages were out defending IGT on Wednesday, telling investors that such concerns were overblown. J.P. Morgan, Deutsche Bank, Prudential Equity Group, Goldman Sachs and Citigroup Smith Barney reiterated their buy ratings on IGT. (All of the brokerages, except Prudential, do and seek to do business with the companies covered in research reports.)

"Shares of IGT and

WMS Industries

(WMS) - Get Report

have been quite weak recently on concerns of slot legislation in Pennsylvania, the perceived shrinking of the U.K. market, and Alliance's earnings disappointment," said Marc Falcone, analyst at Deutsche Bank, in a note. "We think the stocks have been oversold, and investors should use these pullbacks as buying opportunities."

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