{"id":178449,"date":"2021-07-02T12:41:28","date_gmt":"2021-07-02T19:41:28","guid":{"rendered":"https:\/\/www.casino.org\/news\/?p=178449"},"modified":"2021-07-02T13:53:10","modified_gmt":"2021-07-02T20:53:10","slug":"scientific-games-stock-stands-to-benefit-from-planned-divestments","status":"publish","type":"post","link":"https:\/\/www.casino.org\/news\/scientific-games-stock-stands-to-benefit-from-planned-divestments\/","title":{"rendered":"Scientific Games Earns Analyst Praise for Lottery, Sports Betting Divestment Plans"},"content":{"rendered":"

Earlier this week, Scientific Games (NASDAQ:SGMS) revealed plans to part with its lottery management and sports wagering businesses. The move is drawing applause from Wall Street.<\/p>\n

\"Scientific
A gambler at Scientific Games slot machines. An analyst is bullish on the company’s plan to sell its lottery and sports betting units. (Image: Las Vegas Review-Journal<\/em>)<\/figcaption><\/figure>\n

In a note to clients, Stifel analyst Jeffrey Stantial reiterated a \u201cbuy\u201d rating on Scientific Games stock on the divestment news. He also boosted his price target on the slot machine manufacturer to $86 from $66. The new forecast implies upside of 11.6 percent from where the shares currently reside.<\/p>\n

We are positive on the announcement, as we have long felt that SGMS’s lottery operations were garnering an unwarranted conglomerate discount,\u201d said Stantial. \u201cMeanwhile, with B2B sports betting platform providers looking like an increasingly competitive space (as operators take technology in-house), we think focusing on iGaming content will likely provide higher returns on capital for SGMS over time.\u201d<\/p><\/blockquote>\n

While Scientific Games didn’t say when the transactions will be completed, it is mulling an initial public offering (IPO), a merger with a special purpose acquisition company<\/a> (SPAC), or an outright sale or a combination with another company for the lottery unit and Don Best sports wagering platform.<\/p>\n

Scientific Games Looking to Delever<\/h2>\n

While Scientific Games stock is one of the best-performing gaming equities this year, the Las Vegas-based company still sports a bloated balance sheet.<\/p>\n

\n

Divesting the lottery and sports wagering units is aimed at reducing that debt burden. The company is also rumored to be considering an IPO in Australia<\/a> to raise additional capital. Parting with the aforementioned businesses will also help Scientific Games further leverage its still-sizable stake in SciPlay (NASDAQ:SCPL) to better capitalize on the fast-growing iGaming space. As Stifel’s Stantial notes, that could be a rewarding move.<\/p>\n<\/div>\n

\u201cOn that note, management expects their digital businesses (SCPL and iGaming) to be comparable to their land-based business within three years,\u201d says the analyst. \u201cAssuming LSD annual growth for the land-based business, we think this implies ~$2B in revenues for SGMS’s online offerings, or 161 percent growth vs. 2020A (+38 percent annual CAGR).\u201d<\/p>\n

Debt Reduction Could Open Investor Base<\/h2>\n

A lesson that remains from the 2020 coronavirus market swoon, and it’s one applicable to gaming equities, is that if the broader market environment sours, investors will punish highly indebted companies.<\/p>\n

As such, Scientific Games’ efforts to tidy up its fiscal house<\/a> could pay dividends. That’s in the form of not only potentially boosting credit ratings and lowering financing costs, but also by appealing to a broader swath of investors.<\/p>\n

\u201cWe expect a portion of proceeds to be allocated to strategic investments back into the gaming business (tuck-in M&A, higher R&D, etc.), but still see a significantly strengthened balance sheet nevertheless,\u201d adds Stantial. \u201cWe think this could help drive the next phase of re-rating for the shares, as we believe SGMS’s prior leverage levels had limited the addressable investor base for a number of years.\u201d<\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"

Earlier this week, Scientific Games (NASDAQ:SGMS) revealed plans to part with its lottery management and sports wagering businesses. The move is drawing applause from Wall Street. In a note to clients, Stifel analyst Jeffrey Stantial reiterated a \u201cbuy\u201d rating on Scientific Games stock on the divestment news. He also boosted his price target on the […]<\/p>\n","protected":false},"author":46,"featured_media":178450,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[10,33810],"tags":[],"acf":[],"yoast_head":"\nScientific Games Stock Stands to Benefit from Planned Divestments<\/title>\n<meta name=\"description\" content=\"Analyst says Scientific Games stock could offer more upside following divestment of sports betting, lottery units.\" \/>\n<meta name=\"robots\" content=\"noindex, follow\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Scientific Games Stock Stands to Benefit from Planned Divestments\" \/>\n<meta property=\"og:description\" content=\"Analyst says Scientific Games stock could offer more upside following divestment of sports betting, lottery units.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.casino.org\/news\/scientific-games-stock-stands-to-benefit-from-planned-divestments\/\" \/>\n<meta property=\"og:site_name\" content=\"Casino.org\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/Casino.OrgNews\" \/>\n<meta property=\"article:published_time\" content=\"2021-07-02T19:41:28+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2021-07-02T20:53:10+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/www.casino.org\/news\/wp-content\/uploads\/2021\/07\/sgms.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"1050\" \/>\n\t<meta property=\"og:image:height\" content=\"808\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"author\" content=\"Todd Shriber\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:creator\" content=\"@etfgodfather\" \/>\n<meta name=\"twitter:site\" content=\"@Casino_Org\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Todd Shriber\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"3 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"WebPage\",\"@id\":\"https:\/\/www.casino.org\/news\/scientific-games-stock-stands-to-benefit-from-planned-divestments\/\",\"url\":\"https:\/\/www.casino.org\/news\/scientific-games-stock-stands-to-benefit-from-planned-divestments\/\",\"name\":\"Scientific Games Stock Stands to Benefit from Planned Divestments\",\"isPartOf\":{\"@id\":\"https:\/\/www.casino.org\/news\/#website\"},\"primaryImageOfPage\":{\"@id\":\"https:\/\/www.casino.org\/news\/scientific-games-stock-stands-to-benefit-from-planned-divestments\/#primaryimage\"},\"image\":{\"@id\":\"https:\/\/www.casino.org\/news\/scientific-games-stock-stands-to-benefit-from-planned-divestments\/#primaryimage\"},\"thumbnailUrl\":\"https:\/\/www.casino.org\/news\/wp-content\/uploads\/2021\/07\/sgms.jpg\",\"datePublished\":\"2021-07-02T19:41:28+00:00\",\"dateModified\":\"2021-07-02T20:53:10+00:00\",\"author\":{\"@id\":\"https:\/\/www.casino.org\/news\/#\/schema\/person\/f4cecf70a5032bc4e60eb73fc86d4a85\"},\"description\":\"Analyst says Scientific Games stock could offer more upside following divestment of sports betting, lottery units.\",\"breadcrumb\":{\"@id\":\"https:\/\/www.casino.org\/news\/scientific-games-stock-stands-to-benefit-from-planned-divestments\/#breadcrumb\"},\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"ReadAction\",\"target\":[\"https:\/\/www.casino.org\/news\/scientific-games-stock-stands-to-benefit-from-planned-divestments\/\"]}]},{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\/\/www.casino.org\/news\/scientific-games-stock-stands-to-benefit-from-planned-divestments\/#primaryimage\",\"url\":\"https:\/\/www.casino.org\/news\/wp-content\/uploads\/2021\/07\/sgms.jpg\",\"contentUrl\":\"https:\/\/www.casino.org\/news\/wp-content\/uploads\/2021\/07\/sgms.jpg\",\"width\":1050,\"height\":808,\"caption\":\"A gambler at Scientific Games slot machines. 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