{"id":269538,"date":"2023-04-19T18:52:18","date_gmt":"2023-04-19T23:52:18","guid":{"rendered":"https:\/\/www.casino.org\/news\/?p=269538"},"modified":"2023-04-19T18:52:18","modified_gmt":"2023-04-19T23:52:18","slug":"igt-could-be-star-among-slot-machine-stocks-says-analyst-bain","status":"publish","type":"post","link":"https:\/\/www.casino.org\/news\/igt-could-be-star-among-slot-machine-stocks-says-analyst-bain\/","title":{"rendered":"International Game Technology Could Be Jackpot for Investors, Says Analyst"},"content":{"rendered":"

Investors don\u2019t need to play slots to hit jackpots, but they can benefit from vibrancy ascribed to gaming device manufacturers International Game Technology (NYSE: IGT) and Light & Wonder (NASDAQ: LNW).<\/p>\n

\"IGT
A Wheel of Fortune slot machine in a casino. An analyst is bullish on manufacturer IGT.(Image: Pinterest)<\/figcaption><\/figure>\n

That\u2019s the sentiment of B. Riley analyst David Bain who initiated coverage of both stocks in notes to clients today. He started coverage of Light & Wonder with a \u201cneutral\u201d rating and a $57 price target, implying downside from today\u2019s closing handle at $61.84. He\u2019s more constructive on IGT<\/a> on which he has a \u201cbuy\u201d grade and price objective of $43, or 55.3% above where the shares closed today.<\/p>\n

One of the reasons Bain is bullish on IGT is its highly profitable lottery unit. Light & Wonder sold its lottery business in late 2021<\/a>.<\/p>\n

IGT’s lottery systems and solutions are used by 8 of the top 10 largest lotteries globally,\u201d wrote Bain. \u201cThe average customer relationship duration is measured in decades, and IGT has been successful in converting 100% of top 10 incumbent rebids. Lottery is known for its significant size, recurring nature (IGT lottery revenue is ~90% recurring), and economic resiliency.\u201d<\/p><\/blockquote>\n

He adds that many investors may be overlooking the growth part of the lottery equation, which includes a steady influx of new players, rising appetite for pricier scratchers and the emerging iLottery industry.<\/strong><\/p>\n

IGT Trades At Surprising Discount<\/h2>\n

While casinos remain dedicated buyers of new slot machines and IGT is one of the leaders<\/a> in terms of North American market share in the industry, its shares trade at a steep discount relative to its peer group.<\/p>\n

\u201cYet, IGT trades 20% below the casino supplier peer average. The remaining ~4% of IGT\u2019s business is digital content delivery, a high-growth, asset-light business with comps averaging 9.8x. We believe real-time strength across each of IGT’s categories will prompt a valuation re-rating by investors,\u201d observed Bain.<\/p>\n

\n

Gaming accounts for 25% of IGT\u2019s earnings before interest, taxes, depreciation and amortization (EBITDA) and it\u2019s also the company\u2019s fastest-growing segment. IGT is the company behind the famous Wheel of Fortune<\/em> series of slot machines, but its slot portfolio expands well beyond that title.<\/p>\n<\/div>\n

\u201cWe examine several valuation scenarios with each yielding the same conclusion: IGT is undervalued. Even applying significant valuation discounts to IGT\u2019s lottery and gaming businesses versus peers (despite strong setups for both divisions, in our opinion) results in a significantly higher stock price,\u201d said Bain.<\/p>\n

Light & Wonder Evaluation<\/h2>\n

Bain acknowledges there are some points to like with Light & Wonder<\/a>, including the company\u2019s sizable de-leveraging story, which came by way of selling its lottery and sports betting businesses. Additionally, the firm is one of leaders in North American slot market share.<\/p>\n

The analyst\u2019s tepid \u201cneutral\u201d rating on the stock appears to be the result of valuation and the potential need for an acquisition to lift near-term EBITDA.<\/strong><\/p>\n

\u201cLNW\u2019s EV\/EBITDA is 16% above the casino supplier peer average, and its 6% FCF yield compares to peers at 10%,\u201d concluded Bain. \u201cWhile we believe LNW\u2019s business mix, product specialty depth, and strong management support a valuation premium to most suppliers, our sum-of-the-parts valuation, which uses above-peer multiples to segment EBITDA, does not justify share price upside from current levels, particularly in light of certain risks.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"

Investors don\u2019t need to play slots to hit jackpots, but they can benefit from vibrancy ascribed to gaming device manufacturers International Game Technology (NYSE: IGT) and Light & Wonder (NASDAQ: LNW). That\u2019s the sentiment of B. Riley analyst David Bain who initiated coverage of both stocks in notes to clients today. He started coverage of […]<\/p>\n","protected":false},"author":46,"featured_media":230135,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[10,13699,69293],"tags":[81903,13701,81890],"acf":[],"yoast_head":"\nIGT Could Be Star Among Slot Machine Stocks, Says Analyst Bain<\/title>\n<meta name=\"description\" content=\"IGT could be big winner among slot machine equities, according to analyst.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.casino.org\/news\/igt-could-be-star-among-slot-machine-stocks-says-analyst-bain\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"IGT Could Be Star Among Slot Machine Stocks, Says Analyst Bain\" \/>\n<meta property=\"og:description\" content=\"IGT could be big winner among slot machine equities, according to analyst.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.casino.org\/news\/igt-could-be-star-among-slot-machine-stocks-says-analyst-bain\/\" \/>\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=\"2023-04-19T23:52:18+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/www.casino.org\/news\/wp-content\/uploads\/2022\/09\/wof.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"1600\" \/>\n\t<meta property=\"og:image:height\" content=\"1200\" \/>\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\/igt-could-be-star-among-slot-machine-stocks-says-analyst-bain\/\",\"url\":\"https:\/\/www.casino.org\/news\/igt-could-be-star-among-slot-machine-stocks-says-analyst-bain\/\",\"name\":\"IGT Could Be Star Among Slot Machine Stocks, Says Analyst Bain\",\"isPartOf\":{\"@id\":\"https:\/\/www.casino.org\/news\/#website\"},\"primaryImageOfPage\":{\"@id\":\"https:\/\/www.casino.org\/news\/igt-could-be-star-among-slot-machine-stocks-says-analyst-bain\/#primaryimage\"},\"image\":{\"@id\":\"https:\/\/www.casino.org\/news\/igt-could-be-star-among-slot-machine-stocks-says-analyst-bain\/#primaryimage\"},\"thumbnailUrl\":\"https:\/\/www.casino.org\/news\/wp-content\/uploads\/2022\/09\/wof.jpg\",\"datePublished\":\"2023-04-19T23:52:18+00:00\",\"dateModified\":\"2023-04-19T23:52:18+00:00\",\"author\":{\"@id\":\"https:\/\/www.casino.org\/news\/#\/schema\/person\/f4cecf70a5032bc4e60eb73fc86d4a85\"},\"description\":\"IGT could be big winner among slot machine equities, according to analyst.\",\"breadcrumb\":{\"@id\":\"https:\/\/www.casino.org\/news\/igt-could-be-star-among-slot-machine-stocks-says-analyst-bain\/#breadcrumb\"},\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"ReadAction\",\"target\":[\"https:\/\/www.casino.org\/news\/igt-could-be-star-among-slot-machine-stocks-says-analyst-bain\/\"]}]},{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\/\/www.casino.org\/news\/igt-could-be-star-among-slot-machine-stocks-says-analyst-bain\/#primaryimage\",\"url\":\"https:\/\/www.casino.org\/news\/wp-content\/uploads\/2022\/09\/wof.jpg\",\"contentUrl\":\"https:\/\/www.casino.org\/news\/wp-content\/uploads\/2022\/09\/wof.jpg\",\"width\":1600,\"height\":1200,\"caption\":\"A Wheel of Fortune slot machine in a casino. 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