UPDATE: Stifel Initiates Coverage On Multimedia Games

In a note released Tuesday morning, Stifel analyst Steven Wieczynski initiated coverage on Multimedia Games MGAM, a company involved with the design, manufacture and supply of slot and video lottery machines, with a Buy rating and a $36 price target.

Wieczynski listed the following as reasons to consider:

• Penetration into recently-entered markets
• Unique product offering
• A "well protected" and "highly-recurring" core business which provides "predictable" cash flows
• Commitment and ability to fund future growth initiatives
• "A savvy management team"
• A history of redistributing excess cash to shareholders
• An under-leveraged balance sheet

Looking forward, Wieczynski forecasts EPS for 2014-2016 of $1.28, $1.47 and $1.65, respectively, and has also estimated a three-year CAGR over the same period of 36 percent.