Goldman Sachs Comments On WMS Industries Following 3Q Pre-Announcement

WMS Industries WMS lowered FY11 revenue guidance to $790-$800 mn, below Goldman's $818 mn estimate, consensus of $833 mn, and prior guidance of $833-$850 mn due to lower-than-anticipated new unit demand, execution challenges, and a slower pace of regulatory approvals due to increased complexity of new gaming features. WMS expects 3QFY11 revenues of $191-$193 mn, below Goldman's estimate of $209 mn, consensus of $234 mn, and prior guidance of $209-$215 mn. WMS expects 3QFY11 EPS to be in the range of $0.40-$0.42, below Goldman's $0.48 and consensus of $0.51. WMS also introduced FY12 revenue guidance of $810-$850 mn vs. Goldman's estimate of $884 mn. Goldman Sachs remains Sellers of WMS and continues to have a Cautious view on the slot industry. Notably, in today's release, WMS stated that it does not expect meaningful improvements in the industry environment over the remainder of calendar 2011 or for calendar 2012. Goldman lowers its PT to $27 from $32.50 based on lower EPS estimates and a lower multiple of 13.5X from 14.5X due to increasing industry concerns. WMS closed Monday at $36.22