On Tuesday, B.Riley resumed coverage on Light & Wonder (NASDAQ:LNW) shares with a Buy rating and an increased price target of $120. The firm highlighted the company's position in the market, noting its enterprise value to earnings before interest, taxes, depreciation, and amortization (EV/EBITDA) valuation is approximately 40% below that of its closest peer. Moreover, Light & Wonder's valuation sits 13% below its own historical average.
The analyst pointed to the company's significantly de-levered balance sheet and robust policies for returning capital to shareholders as key strengths. Despite recent challenges, including a stock price decline triggered by a preliminary injunction against its Dragon Train franchise, B.Riley sees these events as creating a more attractive entry point for investors.
Light & Wonder's market share gains are expected to continue through the calendar year 2026, driven by an expansion of product offerings, entry into new categories, and potential market disruptions due to mergers and acquisitions among competitors. The company's digital social casino platform, SciPlay (NASDAQ:SCPL), has been outperforming the industry, and B.Riley anticipates further long-term synergies across Light & Wonder's platforms.
The firm also underscored Light & Wonder's leadership in the iGaming sector, particularly in U.S. online slots, where it holds the highest gross gaming revenue share. The analyst sees additional growth potential in the company's early-stage opportunities in live dealer games. These factors contribute to B.Riley's positive outlook on Light & Wonder's stock.
In other recent news, Light & Wonder reported a 12% increase in Q2 consolidated revenue to $818 million, while operating income rose to $175 million. The company also initiated a $1 billion share repurchase program and set a target of $1.4 billion adjusted EBITDA by 2025.
Despite facing a legal setback with the Dragon Train franchise, Light & Wonder maintains its financial goals, with firms such as Benchmark and UBS maintaining a Buy rating. However, Stifel and Susquehanna revised their price targets to $100 and $90, respectively, due to the legal issues.
Maxim Group initiated coverage of Light & Wonder with a Buy rating and a higher price target of $144, predicting 11% sales growth in 2024 and 8% in 2025. The company's commitment to regulatory compliance was demonstrated through a recent update to the Australian Securities Exchange concerning its CHESS Depositary Interests. These recent developments highlight the company's resilience in the face of legal challenges and its ongoing commitment to growth and compliance.
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