On Thursday, Mizuho Securities adjusted its financial outlook for Light & Wonder (NASDAQ: LNW), reducing the price target to $79 from the previous $83. The firm sustained its rating on the company's stock amidst the latest earnings report.
Light & Wonder announced higher-than-expected earnings, with reported revenue reaching $756 million, surpassing both Mizuho's projection of $711 million and the consensus estimate of $725.6 million. The company's Adjusted EBITDA also exceeded expectations, coming in at $281 million against Mizuho's forecast of $266 million and the market estimate of $269.5 million.
In terms of product shipments, Light & Wonder's performance in the U.S. and Canada was nearly in line with projections, delivering 31,534 units compared to Mizuho's estimate of 31,532 and the consensus of 31,570. International shipments totaled 22,163 units, slightly below Mizuho's prediction of 22,215 and the consensus figure of 22,337.
Despite these positive results, Mizuho expressed caution regarding the sustainability of the company's machine sales. The firm cited concerns about the potential short-lived nature of the current sales boost, particularly noting the slowing restocking trend in the U.S. and challenges in replicating international sales success.
Mizuho maintains its Underperform rating on Light & Wonder's stock. The decision to lower the price target reflects the firm's view on the value generated by the incremental sales, which, according to Mizuho, may not be indicative of long-term performance.
InvestingPro Insights
As Light & Wonder (NASDAQ: LNW) continues to navigate the market, current InvestingPro data provides a deeper financial perspective. With a market capitalization of $8.7 billion, the company is trading at a high earnings multiple, with a P/E ratio of 53.91. However, looking ahead, the adjusted P/E ratio for the last twelve months as of Q1 2024 drops to a more moderate 25.99, suggesting a potential normalization of earnings valuation. The robust gross profit margin of 70.25% for the same period indicates the company's strong ability to retain earnings from sales after accounting for the cost of goods sold.
InvestingPro Tips highlight that Light & Wonder's liquid assets exceed short-term obligations, which may provide a cushion for operational flexibility. Moreover, analysts anticipate the company will be profitable this year, supported by a profitable performance over the last twelve months. For those looking to dive deeper into the financial health and future prospects of Light & Wonder, InvestingPro offers additional insights. With a total of 10 additional InvestingPro Tips available, investors can gain a comprehensive understanding of the company's financial landscape.
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