Why Scientific Games' Shares Dropped


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 dropped 10% today after being downgraded by an analyst.

So what: Deutsche Bank downgraded the stock from hold to sell and lowered its price target to $6, still $2.50 below today's price. The analyst pointed to risks in the company's business model and with its buyout of WMS Industries .

Now what: We Fools don't take Wall Street ratings too seriously, because stocks can pop or drop short-term on an upgrade or downgrade, but few investors remember a rating long-term. But in this case, I have to agree with the sell rating. Swallowing a company bigger than you is risky, especially when your core business isn't doing very well. I'd stay away from the stock and at least let the merged companies reach steady state before thinking about buying in again.

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

Fool contributor Travis Hoium has no position in any stocks mentioned. You can follow Travis on Twitter at @FlushDrawFool, check out his personal stock holdings, or follow his CAPS picks at TMFFlushDraw. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools don't 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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