Analyst: Trends boost Everi estimates

July 9, 2024 3:29 PM
Photo: CDC Gaming Reports
  • David McKee, CDC Gaming Reports
July 9, 2024 3:29 PM
  • David McKee, CDC Gaming Reports
  • United States

After meeting with management of Everi Holdings, Jefferies Equity Research analyst David Katz raised his projections for the company’s second-quarter results. Katz deemed prior assumptions about Everi’s business “too conservative.”

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Katz increased his second-quarter revenue target from $191.5 million to $197.4 million. He also adjusted his adjusted EBITDA projection upward from $83.3 million to $84.9 million.

The analyst based his revisions on “current trends through the end of the quarter,” along with small improvements in product sales. “Broadly speaking, we believe our quarterly estimates were too conservative, while the company continues to ramp up new products,” he wrote.

There was a caveat to the effect that Everi’s in-progress merger with International Game Technology created inbuilt uncertainty. For this reason, Katz maintained a Hold rating on the stock, which was trading at $8.30 per share at the time.

Katz also hewed to his previous price target of $9 a share. “The pending spin-off and merger with IGT’s gaming businesses establishes uncertainty based on the time to closing, which could be as early as the end of the year, as well as post closing as the company integrates the businesses, captures synergies and generates positive momentum.”

Because of this uncertainty, Katz felt that the valuation of Everi shares would find little support on Wall Street, “absent a meaningful upturn in earnings.”

While not specifically delving into the substance of his meetings with Everi executives, Katz offered a preview of the next earnings call. He expected company leaders to discuss Everi’s long-term durability, particularly with regard to product and market growth.

“We also expect updates on the FinTech business, which has demonstrated solid momentum recently,” Katz concluded. “Finally, we expect [management] to provide an update on the merger process with IGT and regulatory approval.”