Morgan Stanley Overweight On International Game Technology (IGT)

Morgan Stanley has an Overweight rating on shares of International Game Technology IGT. In a note to investors, Morgan Stanley writes, "IGT's pending purchase of an online gaming company is a firm strategic positive, long term, but should have little near-term impact on operating performance, in our view. The acquisition better positions IGT for the continued legalization of online gaming in Europe and the potential legalization in the US. We believe the ~$115 mn offer is reasonable given that we expect IGT to generate ~$1.0bn in cumulative FCF through 2013." Morgan Stanley goes on to say, "Contrary to consensus, we continue to expect IGT to lead the recovery in the supplier industry due to its industry- leading variable exposure to Game Ops (~70% of its EBITDA). We expect IGT's Game Ops metrics to continue to accelerate throughout FY11, which combined with still low investor / sell-side expectations, drive a compelling LT risk-reward, in our view." Shares of IGT gained 20 cents yesterday to close at $17.73, a gain of 1.14%.