PlayAGS (NYSE: AGS) is i of the best-performing gaming stocks today. That’s after Jefferies analyst Saint David Katz highlighted it as a small-cap valuation opportunity.
In a short letter to clients, Katz upgraded the one-armed bandit political machine manufacturing business to “buy” from “neutral,” patch boosting his toll point on the call to $10 from $7, implying upside of 89% from the May 12 close. That bullish commentary contributed to PlayAGS’s Monday pop, which has the buy in higher past 16.79% inward midday trading on loudness that’s already matched the day-after-day average.
The cornerstone for the upgrade is that the trading operations are progressing best than the past tense tercet years brand the missteps of 2019 and Covid,” wrote Katz. “The [latest] billet supports the trend that product momentum has been edifice o'er the past several quarters, which should persist in to accelerate.”
PlayAGS struggled lastly year. But the shares are upwards 19.80% yr to date, and it remains a preferent small-cap gaming toy among sell-side analysts, many of whom weigh the stock up undervalued. The 52-week luxuriously on the make is $8.40. It resides around $6.20 at this writing.
PlayAGS Stock Upside Catalysts
Las Vegas-based PlayAGS lately reported estimate-beating first-quarter results, which were propped upwards by strength in the company’s electronic gaming simple machine (EGM) unit.
Better-than-expected 1Q23 revenue [was] attributed to a broadened planetary client bag and increased EGM sales, notably inward international markets,” noted Katz. “Given the mathematical product traction, we trust the disruption of valuation from the earnings quickening presents opportunity.”
Last month, another psychoanalyst observed that PlayAGS started the indorse quarter on a strong note, and that the companionship has solid two- to three-month profile in terms of client purchasing trends. Wall Street expects the steadfastly to snick mellow single-digit sales growing this year.
Amid the top off and bottom-line impulse PlayAGS accrued inwards the foremost quarter, Katz believes direction can copy that positiveness sledding forward.
“Our impression from management is its time to come strategies back up this acceleration. AGS and its peers feature reached out-of-favor status. We trust herein lies the opportunity for a severely undervalued small-cap stock,” according to the analyst.
PlayAGS Has Rising Sales, Declining Leverage
PlayAGS offers investors other compelling attributes, including rising sales and earnings before interest, taxes, depreciation, and amortization (EBITDA) and declining leverage.
We expect revenue and Adj. EBITDA to proceed growing, [and] purchase to start decreasing,” Jefferies’ Katz concluded.
While not mentioned by the analyst, gaming industry consolidation is picking up, and small-cap one-armed bandit manufacturers with archetype cognitive content that can buoy follow leveraged for online casinos could live attractive targets.
On that note, Inspired Entertainment (NASDAQ: INSE) offered $10 a apportion for PlayAGS cobbler's last year. But those talks collapsed, as the place believed its worth to a greater extent than that. In the wake of that deal, some analysts speculated other buyers would boot the tires on PlayAGS. But no more bid was publically revealed inward the subsequent months.
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