Light & Wonder (NASDAQ: LNW) inventory is on a torrid tread in 2023, posting a year-to-date bring in of 29%. But at to the lowest degree i psychoanalyst sees the potential for a great deal to a greater extent upside.
In a note of hand to clients on Tuesday, Redburn Atlantic psychoanalyst Andrew Tam initiated coverage of the gaming gimmick maker with a “buy” rating and $104 terms target, implying upside of 40% from the August 21 close. In midday trading, shares of Light & Wonder are higher by 2.41% with the help of Tam’s report.
The gaming business concern remains highly profitable, and ongoing product improvements allow Light & Wonder easily placed to retake part within gaming,” wrote Tam.
The Las Vegas-based company of late said it remains on rate to notch adjusted earnings before interest, taxes, depreciation, and amortisation (EBITDA) of $1.4 one thousand million by 2025.
Light & Wonder Asset Sales Applauded past Tam
In 2021, the companionship formerly known as Scientific Games sold its lottery and sports betting units — transactions that raised near $7 one thousand million in cash, impulsive leverage to 3.1x from 10.5x.
Wall Street has lauded that equipoise weather sheet repair. While drawing businesses are highly profitable, the new, leaner edition of Light & Wonder has the resources to focus on higher growing segments. Those moves could make up sour for long-term investors.
“The sale proceeds were used to pay off shoot down debt, repairing Light & Wonder’s balance sheet,” added Tam. “The divestments non only if de-levered the business, but also repositioned Light & Wonder towards the faster growing digital segments of social gaming (SciPlay) and online RMG (iGaming).”
Speaking of SciPlay (NASDAQ: SCPL), Light & Wonder announced before this month that it’s acquiring the 17% of the societal cassino developer it doesn’t in time own. That paves the path for a reunion with the accompany it spun turned inward 2019. The sell is scheduled to close-fitting inward the fourth quarter.
It could turn up to live a smarting make a motion past Light & Wonder. SciPlay’s revenue jumped 18% inwards the June quarter, piece meshing income increased 28% year-over-year. The gaming company’s cash-on-hand tally rosiness $64.8 jillion to $394.9 million.
Catalysts for Light & Wonder Stock
In gain to using some of the proceeds from the sales of its drawing and sports wagering units to fund digital businesses, Light & Wonder has been a steady vendee of its have shares, indicating that management sees value inward the stock. That could follow an avenue of supporting should the broader securities industry round south.
Wall Street is bullish on the name, with quintet of the nine analysts natural covering it rating the stock the combining weight of a “strong buy.”
Still, Tam’s $104 price target, the highest on the Street, stands out, as it is good in surplus of the consensus Light & Wonder terms calculate of $80.25.
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