On Tuesday, Stifel maintained a Hold rating on Light & Wonder (NASDAQ:LNW) stock and increased the shares target to $106 from the previous $98.
The adjustment comes on the back of enhanced forecasts for the company's slot products and the momentum of average revenue per daily active user (ARPDAU) in its SciPlay (NASDAQ:SCPL) division.
The firm raised its second-quarter and full-year 2024 adjusted EBITDA estimates by 2% and 1%, respectively. This revision is primarily due to higher international slot sales, with notable performance in Australia and Asia, and stronger anticipated ARPDAU growth in the second half of 2024 for SciPlay. Additionally, a modest sequential margin expansion for SciPlay is expected, benefiting from user acquisition seasonality and direct-to-consumer penetration.
Stifel's intra-quarter assessments of Light & Wonder's leased slot products have yielded predominantly favorable results. Slot floor managers have reported a robust performance for the Dragon Train franchise and positive initial outcomes for the new Monopoly stepper franchise. The upcoming Squid Game franchise is also generating high expectations.
Feedback on the company's for-sale content, particularly the Huff N' Puff franchise, has been positive. While it's still early days, the feedback, potential market shifts due to the IGT/EVRI merger, and expansion into new market segments suggest a promising outlook for Light & Wonder's North American market share growth. This has been a prior concern for Stifel.
The firm has also modestly increased its international slot shipment estimates, reflecting a sequential expansion in the Australia and New Zealand (ANZ) market and additional data on operations and equipment (O&E) in Asia.
In other recent news, Light & Wonder has been the subject of several significant developments. Truist Securities has increased the price target for shares of the company to $120, maintaining a Buy rating.
This came after Light & Wonder reported a 13% year-over-year increase in consolidated revenue to $756 million in its first quarter, marking the company's 12th consecutive quarter of growth.
Goldman Sachs (NYSE:GS) also 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 expects Light & Wonder to meet its 2025 adjusted earnings before interest, taxes, depreciation, and amortization (AEBITDA) target of US$1.4 billion.
In terms of financial restructuring, Light & Wonder introduced a new tranche of term loans amounting to $2.16 billion, a move expected to lower interest expenses and extend debt maturity.
The company has also updated the Australian Securities Exchange (ASX) regarding its holdings, reflecting its commitment to international market regulations and transparent communication.
Lastly, Light & Wonder is exploring mergers and acquisitions opportunities that align with its core business, while also focusing on various markets as part of its expansion plans. These are recent developments in Light & Wonder's operations.
InvestingPro Insights
Following Stifel's updated perspective on Light & Wonder, insights from InvestingPro further enrich the investment landscape for the company. With a market capitalization of $9.21 billion and a robust gross profit margin of 70.25% in the last twelve months as of Q1 2024, Light & Wonder demonstrates a strong profit generation capability. The company's impressive gross margins align with Stifel's optimistic view on the company's slot products and ARPDAU momentum.
InvestingPro Tips highlight that Light & Wonder is expected to see net income growth this year, a factor that may have influenced Stifel's revised price target. Additionally, the stock's considerable six-month price total return of 25.02% and a one-year return of 49.73% reflect a significant uptrend, which could be indicative of the market's positive reception to the company's strategic initiatives and product performance.
For investors interested in deeper analysis and more InvestingPro Tips, including insights on profitability and market valuation, visiting https://www.investing.com/pro/LNW can provide a comprehensive look. Currently, there are 12 additional InvestingPro Tips available, which can be accessed with a subscription. To enhance your investment strategy, use the coupon code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription.
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