On Thursday, Truist Securities increased the price target for shares of Light & Wonder (NASDAQ: LNW) to $120 from $115, while retaining a Buy rating on the stock. The firm's analysts are optimistic about the company's prospects, particularly with the performance of its games like Dragon Train, which is expected to contribute to higher than anticipated financial results in the near term.
The analysts noted that Light & Wonder's stock has been performing well and that, despite a significant valuation difference compared to other U.S.-listed gaming technology companies, there is potential for further stock appreciation if earnings estimates are raised and interest from Australian investors remains strong.
This sentiment comes amidst a backdrop where investors are keenly watching the company's progress toward its ambitious $1.4 billion adjusted EBITDA goal for 2025.
The recent move to take AGS private has been a topic of interest among investors, but Truist Securities has decided to keep their financial model for Light & Wonder unchanged, aligning with consensus estimates on Wall Street. The firm's decision reflects a steady confidence in the company's strategic direction and financial health.
Light & Wonder's management team has been focused on achieving its financial targets, and the firm's analysts believe that the company's strategy and performance could keep attracting investor attention. The positive outlook on the company is underpinned by its strong game offerings and potential for continued growth in the gaming technology sector.
The price target increase for Light & Wonder reflects a broader industry context where gaming companies are navigating a dynamic market environment. As Light & Wonder continues to execute on its strategic initiatives, the market will be watching to see how the company's financial performance aligns with the expectations set by analysts and investors alike.
In other recent news, Light & Wonder, Inc. has made several strategic moves, including a significant debt restructuring, strong earnings growth, and a positive analyst rating.
The company introduced a new tranche of term loans amounting to $2.16 billion, reducing the applicable margin for these loans, a move expected to lower interest expenses and extend debt maturity. In its first quarter, Light & Wonder reported a 13% year-over-year increase in consolidated revenue to $756 million, marking the company's 12th consecutive quarter of growth.
Goldman Sachs (NYSE:GS) initiated coverage on the company with a Buy rating, forecasting growth driven by market share gains in North America and the success of recently launched games in Australia and New Zealand. The firm anticipates Light & Wonder will meet its 2025 adjusted earnings before interest, taxes, depreciation, and amortization (AEBITDA) target of US$1.4 billion.
Furthermore, Light & Wonder updated the Australian Securities Exchange (ASX) regarding its holdings, reflecting its commitment to international market regulations and transparent communication. The company's gaming segment experienced a 30% rise in global game sales revenue, contributing to a 22% increase in adjusted NPATA to $105 million.
Lastly, Light & Wonder is exploring mergers and acquisitions opportunities that align with its core business, while also focusing on the Illinois VGT market, Canadian VLT market, HHR expansion, and West Virginia VLTs as part of its expansion plans. These are recent developments in Light & Wonder's operations.
InvestingPro Insights
As Light & Wonder (NASDAQ: LNW) continues to capture the attention of investors and analysts alike, recent data from InvestingPro provides a deeper look into the company's financial health and market performance. With a robust market capitalization of $9.18 billion and a high gross profit margin of 70.25% in the last twelve months as of Q1 2024, Light & Wonder demonstrates a strong position in the gaming technology sector. The company's impressive gross profit of $2.09 billion further underscores its financial prowess.
InvestingPro Tips highlight the company's expected net income growth this year and its impressive gross profit margins, which align with the positive sentiment from Truist Securities. Additionally, Light & Wonder has shown a strong return over the last three months, with a 17.32% price total return, reflecting investor optimism and the stock's resilience in a volatile market. For readers looking to delve further into the company's potential, InvestingPro offers additional insights and tips, with a total of 14 InvestingPro Tips available for Light & Wonder at https://www.investing.com/pro/LNW. Interested investors can take advantage of these insights and more by using the coupon code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription.
The company's stock performance and strategic maneuvers, such as the recent move to take AGS private, are key factors to watch as Light & Wonder aims to achieve its $1.4 billion adjusted EBITDA goal by 2025. With a high earnings multiple of 43.52 and a price/book ratio of 11.0, the company trades at a premium, reflecting its growth expectations and the market's confidence in its future profitability.
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