International Game Technology ( IGT) shares have plunged nearly 27% since the company issued less-than-exciting guidance during its earnings release on July 22, but shares reversed direction Monday after CIBC World Markets upgraded the slot machine maker. CIBC analyst William Schmitt boosted his rating to sector outperform, the brokerage's highest, from sector underperform, its lowest, saying the current selloff offers a solid entry point for long-term investors. While IGT's once-torrid unit growth has finally started to slow, the analyst said spooked investors have unfairly punished the stock, which rose $1.84, or 6.1%, to $31.89 on the news. "IGT is a quality company with solid long-term opportunities," said Schmitt in his note, adding later, "The guidance offered by management during its third-quarter earnings call appears to be overly conservative, which we believe is prudent given the current uncertainty surrounding the timing and scope for new machines in California, Pennsylvania and the United Kingdom." For the last few years, IGT has experienced remarkable growth as casino operators have moved toward cashless machines that spit out receipts instead of coins. While a number of new markets, like the U.K., are expected to drive growth going forward, the timeline for these markets to open up has been uncertain as regulators debate gaming laws. In the meantime, the replacement cycle is waning, comparisons are growing tough and the number of machines IGT is shipping has started to fall. The slowdown in sales has already started. In the third quarter, IGT sold 35,100 machines, down from 37,500 a year ago, but with gross margins expanding to 54% from 48% a year ago, the sales dip did not impact profits. Going forward, IGT said that it would grow earnings by 15% annually for the next few years, but only ship between 75,000 and 80,000 machines in fiscal 2005, down from an estimated 90,000 machines in fiscal 2004.