IGT, Light & Wonder Among Gaming Tech Names With Upside

IGT, Light & Wonder Among Gaming Tech Names With Upside

Posted on: February 7, 2023, 02:44h. 

Previous up to date on: February 8, 2023, 01:41h.

Fourth-quarter earnings reviews from gaming technological know-how suppliers will before long get there. That has some analysts anticipating excellent news from the sector.

A lender of Wheel of Fortune slot machines. Producer IGT is one of the gaming tech stocks an analyst is bullish on. (Image: TheStreet.com)

In a new report to shoppers, Stifel analyst Jeffrey Stantial highlighted several slot equipment makers, together with Intercontinental Activity Engineering (NYSE: IGT) and Mild & Ponder (NASDAQ: LNW). Stantial boosted price targets on both of those names. The analyst notes business gamers could provide vivid forecasts for the initially 50 percent of 2023, with all those outlooks turning much more prudent for the back 50 {38557cf0372cd7f85c91e7e33cff125558f1277b36a8edbab0100de866181896} of the 12 months.

Whilst it is unclear whether or not/how administration teams issue macroeconomic uncertainty into preliminary steerage, our foundation case for the sector presumes steady developments via 1H23 with a much more conservative outlook for the again 50 percent of the 12 months,” wrote Stantial. “Despite a cautious medium-term outlook, we see options inside the group.”

He took his rate forecast on IGT to $31 from $27 and lifted his projection on Mild & Speculate to $70 from $61.

IGT, Light-weight & Speculate Have Tailwinds

The recent working ecosystem isn’t great, but there are tailwinds for gaming device producers. These include consumers remaining focused to casino visits, which delivers operators with significantly-essential resiliency.

As Stantial points out, slot device makers are very likely viewing some relief on the supply chain entrance. But it could get some time for margin rewards to accrue as producers perform by means of past year’s stock build.

“Given the ‘discretionary’ nature of slot capex and historical cyclicality, we expect investors go on to value in a meaningful contraction in the slot replacement cycle,” added the analyst. “Ultimately, only time will explain to, although until finally wagering traits commence to roll (if ever), we continue on to see stable replacements need as a affordable base circumstance in mild of frustrated slot capex budgets in 2020/21 and solid product released at the most latest G2E across most big suppliers.”

Certain to IGT, that stock may perhaps have tailwinds in the variety of the enterprise actively trimming personal debt, an less than-appreciated lottery organization, and its quickly-developing iGaming and sports wagering device. The latter could be a candidate for a spinoff in the future.

Mild & Ponder is also paring debt in a large way, and the company controls about 20{38557cf0372cd7f85c91e7e33cff125558f1277b36a8edbab0100de866181896} of the market for equally slot revenue and the mounted foundation of top quality slots in North America.

Bullish on PlayAGS, Far too

In addition to IGT and Mild & Question, Stantial is constructive on a number of gaming tech equities, such as PlayAGS (NYSE: AGS). PlayAGS is expanding its high quality set up base and could see a massive enhance if on line casino gaming is expanded in Texas.

Precisely, our checks propose AGS should really carry on to expand top quality leased models in 2023, supporting aggregate video game ops yields expansion even should really wagering traits commence to roll. Feedback from many operators also implies AGS’s for-sale content material continues to resonate, suggesting current MSD{38557cf0372cd7f85c91e7e33cff125558f1277b36a8edbab0100de866181896} ship share probably proves sustainable,” in accordance to Stantial.

He fees the inventory a “buy” with a $10 cost goal, implying significant upside from latest charges of close to $6.60.