Why Scientific Games Shares Plunged

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Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Scientific Games (NAS: SGMS) ran out of luck today, falling as much as 11% after an analyst downgraded the stock.

So what: Deutsche Bank analyst Carlo Santarelli was the culprit today, lowering the company's stock to a hold rating from buy and cutting its price target to $7 from $10. This comes a week after the company reported disappointing earnings, which sent the stock lower by as much as 34% last Tuesday -- so Santarelli is about a week late to the party.


Now what: A downgrade might have meant something before the company's second-quarter numbers came out, but now that the stock has fallen from where it traded before earnings, I don't think investors should give much weight to it. I don't think this is a reason to change your investment thesis one way or the other, particularly because of the timing of the downgrade. I would focus on the company's slow growth and high debt load instead as reasons to stay away from the stock.

We don't give much weight to analyst ratings in general at The Motley Fool, and this one in particular seems a day (week) late and a dollar short.

Interested in more info on Scientific Games? Add it to your watchlist byclicking here.

The article Why Scientific Games Shares Plunged originally appeared on Fool.com.

Fool contributor Travis Hoium does not have a position in any company mentioned. You can follow Travis on Twitter at @FlushDrawFool, check out his personal stock holdings or follow his CAPS picks at TMFFlushDraw.Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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