Jefferies Equity Research analyst David Katz voiced confidence in his estimates for Light & Wonder in an investor note released Wednesday. He said that Light & Wonder management “continues to reiterate confidence that it can accelerate the business to reach its 2025 target” of $1.4 billion in adjusted cash flow.
To do so, Katz observed, requires “broad, solid execution.” He added that his own numbers for the company had an “upward bias” for next year.
His figures, Katz wrote, reflected current trends as well as strength of demand in Australia and the Pacific Rim. He tamped down his domestic-installed-base numbers for the U.S. and upped his international estimates.
“Furthermore, our long-term view remains largely unchanged, as we expect additional successful product launches through the remainder of 2024,” Katz added. He noted strong-performing Light & Wonder game titles, two of which were in the top three of the latest Eilers & Krejcik “Central Game Performance Report.” These were Huff N Even More Puff, reporting to be doing quadruple the house average in business, and Dragon Train, “expected to perform at high levels as well.”
Light & Wonder leadership is “spending considerable time stressing the opportunity set for social gaming, which is based on improved content and execution.” Katz saw the new emphasis on the social-play sphere as a means of building confidence toward meeting 2025 financial goals.
“Finally,” Katz wrote, “the igaming business should increasingly benefit from the improved game development strategies over time, although state legalization in the U.S. has been slower than expected.”
The analyst summarized the Light & Wonder situation as a rearrangement of the existing furniture in a living room. He raised his price target on the stock to $118 per share (from $113). Katz also reiterated his previous Buy rating. Light & Wonder was trading north of $103 a share at the time of his report.