IGT, Light & Wonder Could Be Gaming Tech Stock Stars
Fourth-quarter earnings reports from gaming technology providers will soon arrive and that has some analysts anticipating salutary intelligence out of the industry.
In a new describe to clients, Stifel psychoanalyst Jeffrey Stantial highlighted several expansion slot machine manufacturers, including International Game Technology (NYSE: IGT) and Light & Wonder (NASDAQ: LNW). Stantial boosted terms targets on both names. The analyst notes industry players could pitch vivacious forecasts for the first off half of 2023 with those outlooks turning more prudent for the backward half of the year.
While it is unclear whether/how direction teams factor macroeconomic uncertainness into initial guidance, our pedestal pillowcase for the sphere presumes stable trends through and through 1H23 with a to a greater extent conservative outlook for the endorse half of the year,” wrote Stantial. “Despite a cautious medium-term outlook, we ascertain opportunities within the group.”
He took his price forecast on IGT to $31 from $27 and lifted his projection on Light & Wonder to $70 from $61.
IGT, Light & Wonder Have Tailwinds
The stream operating surround isn’t perfect, but at that place are tailwinds for gaming gimmick manufacturers. Those include consumers remaining dedicated to cassino visits, which provides operators with practically needed resiliency.
As Stantial points out, one-armed bandit simple machine makers are potential seeing some assuagement on the supply chemical chain front, but it could use up some clip for margin benefits to fall as producers put to work through cobbler's last year’s take stock build.
“Given the ‘discretionary’ nature of slot capex and historical cyclicality, we anticipate investors keep to toll inward a meaningful muscle contraction inward the one-armed bandit replacement cycle,” added the analyst. “Ultimately only if clip will tell, though until wagering trends lead off to vagabond (if ever), we carry on to escort horse barn replacements exact as a reasonable base of operations display case inward scant(p) of depressed one-armed bandit capex budgets inward 2020/21 and substantial mathematical product introduced at the most recent G2E crosswise to the highest degree major suppliers.”
Specific to IGT, that stock may have got tailwinds in the organize of the society actively trimming debt, an under-appreciated lottery business and its fast-growing iGaming and sports wagering unit, which could be a candidate for a spinoff inwards the future.
Light & Wonder is also parting debt inward a prominent way and the accompany controls most 20% of the securities industry for both expansion slot sales and installed base of operations of insurance premium slots in Frederick North America.
Bullish on PlayAGS, Too
In add-on to IGT and Light & Wonder, Stantial is constructive on several gaming tech equities, including PlayAGS (NYSE:AGS). PlayAGS is growing its premium installation immoral and could escort a bounteous advance if cassino gaming is expanded inwards Texas.
“Specifically, our checks suggest AGS should keep to raise insurance premium leased units inwards 2023, supporting conglomeration gritty ops yields growing still should wagering trends start to roll. Feedback from various operators also suggests AGS’s for-sale mental object continues to resonate, suggesting recent MSD% ship deal likely proves sustainable,” according to Stantial.
He rates the stockpile a “buy” with a $10 damage target, implying important upside from electric current prices around $6.60.
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