UPDATE: Stifel Reiterates Buy Rating, Raises PT on Bally Technologies as SHFL Combination is Still Not Fully Priced In

In a report published Thursday, Stifel analyst Steven Wieczynski reiterated a Buy rating on Bally Technologies BYI, and raised the price target from $90.00 to $94.00. In the report, Stifel noted, “We are updating our Bally Technologies (BYI) model to account for the successful acquisition of shfl Entertainment (SHFL) on November 25, 2013. Despite the 66% advance in BYI shares YTD (SPX +26%) we remain attracted to the BYI story as we sense investors continue to discount the inherent value of the SHFL enterprise and believe BYI is set up to have another strong run in 2014. Furthermore, we believe the combined entity's ability to generate ample FCF should allow BYI to de-lever at ~1 turn per year, serving to enhance shareholder value over time. Lastly, with the combined platform expected to generate ~50% of FY15E revenue from recurring sources, we view BYI as better insulated from demand gyrations within the core North American slot market, which should allow shares to command a premium multiple relative to the group, in turn presenting ample upside potential from current levels. We maintain our Buy rating and are raising our price target to $94 (+$4), which reflects the application of an 18.5x multiple on revised FY15E EPS of $5.08 and implies ~26% upside from current levels.” Bally Technologies closed on Wednesday at $74.31.