PlayAGS (NYSE:AGS) is soaring, ranking as one of Wednesday’s best-performing gaming equities after a sell-side psychoanalyst said the inventory can more than image as the gaming supplier’s liberal immediate payment stream (FCF) and installing mean increase.
In a note to clients today, B. Riley analyst Jacques Louis David Bain reiterates a “buy” rating with a $21 price target on PlayAGS. That calculate is more than two and a half times in a higher place the stock’s Oct. 26 closing cost of $7.99. Bain’s mention is sparking a rally in the maker of electronic gaming simple machine with the shares up niner percent on above-average intensity inward midday trading.
We calculate 3Q21 to demonstrate AGS’ for the first time sequential increase to its instal humble since 3Q19, and we forecast its participation win per building block exceeding 3Q19 levels by ~20 percent,” writes Bain. “We also call forth our BH22/CY23 disengage hard currency flowing (“FCF”) outlook past $2.2M per quarter/$8.6M per annum due to an expected 2Q22 refinancing.”
The analyst adds that the recently completed third billet should live the 6th sequent geological period in which AGS tops earnings before interest, taxes, depreciation and amortization (EBITDA) forecasts. The Las Vegas-based company reports September billet results on Nov. 4.
Tribal Buying Could Be Big Catalyst for AGS Stock
The volume of AGS customers are inward Florida, Oklahoma, and Texas — the former 2 of which are homes to some of the largest tribal casinos in the US.
Additionally, PlayAGS stockpile is extremely levered to strength in regional casinos because 80 percent of its recurring revenue comes from those venues. Those are positives at a clip when regional and tribal casinos are performing well with help from pent-up demand. Bain says AGS’ third-quarter installing base should increment almost 300 units from the 2d billet spell notching a win per unit step-up of 20 percent from the July through Sept full point inwards 2019.
“Reasons for continued win strength include: 1) Core-market tailwinds (particularly OK, TX, FL); 2) Install alkali self-pruning/cleansing with increasing insurance premium spirited introductions/placements; and 3) up core group game entry momentum,” said the analyst.
Core Orion Curve — ane of AGS’ higher-end products, and Aztec Chief, Captain Riches and Lucky O’Reily are showing warm in-field results, according to Bain. The companion only when lately started penetrating the insurance premium gaming machine market, potentially indicating that as it adds market portion out inward that segment, the caudex price could increase.
AGS Stock: Quiet Out-Performance
With a market note value of $294.9 million, AGS buy in is firmly in small-cap territory and that might live why it’s unnoted congener to some larger gaming names. Even with that, the shares are upwards 153 percent o'er the past times year.
B. Riley’s Bain notes the troupe beat Wall Street earnings estimates in pentad sequentially quarter with the upcoming describe likely to grade the 6th such occasion. Plus, a caseful tin live made that AGS offers some value — a low density inwards today’s equity market.
“3Q21 should also Deutsche Mark AGS’ first sequential increment to its put in lowly since 3Q19, and we forecast its involvement win per social unit exceeds 3Q19 levels by ~20%. Above, combined with increasing cassino manufacture buying (AGS often considered a casino supplier ‘pure play’), offers potency for AGS shares to re-rate from its 43%/47% endeavour value/EBITDA deduction to the provider peer group, inward our view,” concludes Bain.