UPDATE: Stifel Nicolaus Upgrades Bally Technologies to Buy, Names $85 PT on Favorable Outlook

In a report published Thursday, Stifel Nicolaus analyst Steven Wieczynski upgraded the rating on

from Hold to Buy, and named an $85.00 price target. In the report, Stifel Nicolaus noted, “Given our favorable view of the potential synergistic benefits stemming from Tuesday's announced acquisition of SHFL entertainment, Inc. (SHFL/Hold/$22.75), we are upgrading Bally Technologies from Hold to Buy and establishing an $85 target price (17x our FY15 pro-forma estimate of $5.02) on the shares, 27% above yesterday's closing price. While some may question the timing of our upgrade, given BYI shares have advanced 50% YTD (SPX +18%), we believe the Street is significantly underestimating the long-run earnings power of the combined BYI/SHFL entity, as our pro-forma model suggests the acquisition could be 22% accretive to our standalone FY15 BYI estimate of $4.12. Given our expectation for the combined platform to deliver outsized EPS growth relative to the broader gaming equipment manufacturer group, we believe shares should be rewarded with a premium valuation multiple (17x) relative to BYI's peer group (~15x).” Bally Technologies closed on Wednesday at $67.13.