Morgan Stanley Opens 60-Day Research Tactical Idea on International Game Technology

Morgan Stanley has opened a research tactical idea on International Game Technology IGT believing that the share price will rise over the next 60 days. In the report, Morgan Stanley writes, "We believe the recent pullback in shares is unwarranted. A sequence of events (DoubleDown deal, likely messy F2Q, and seasonally weak F1Q earnings) appear to have combined to shake investor confidence. While semi-understandable, we believe the R/R is favorable (4:1 Bull/Bear) skew. We highlight key drivers: 1) IGT's EPS should improve sequentially from the seasonally weak Dec Q driven by improving domestic new casino openings and int'l market share gains; 2) the return of capital story is likely to accelerate as IGT has completed online gaming related M&A activity, in our view. We estimate IGT can buy back ~25% of its current market cap through FY14 if it maintains 2x net-leverage; 3) downside should be limited to $13-14 as we value IGT's recurring game ops segment at $13 in our base case." Morgan Stanley maintains its Overweight rating on International Game Technology, which closed Friday at $15.25.