Reflecting on Global Gaming Expo on its final day, Deutsche Bank analyst Carlo Santarelli singled out International Game Technology (IGT) for special praise. Having met with C-suite executives and product managers, he wrote, “We remain of the view that IGT represents compelling value, in front of a healthy pipeline of catalysts, that we believe will further showcase the inherent value in shares at current levels.”
Despite the caveat that IGT’s gaming business does not generate the cash flow that its lottery arm does, Santarelli lauded its sales pipeline for a “continued commitment to innovation,” as well as a “seamless” blend of igaming and conventional gambling product. He also hailed the depth of IGT’s game content and cabinet library, in addition to “an enhanced focus on proven franchise participation and linked products.”
Santarelli perceived even better things ahead for IGT’s gaming sector next year, with operators reinvesting in new slot machine product (and players playing more), as well as the reopening of overseas casinos and the payoff of cost-cutting efforts within the casino industry. Regarding the lucrative lottery business, he predicted it would continue to outperform, posting historically high numbers.
He also foresaw the return of dividend payments, the spinoff of the igaming and sports betting businesses (much as Scientific Games is doing with its sports wagering and lottery segments), a clearer valuation of the lottery branch, based on the eventual Scientific sales of its respective lottery business, and “other potential catalysts” that would be revealed on analyst day next month.
Santarelli reiterated his “Buy” rating on IGT.
