Jefferies Equity Research analyst David Katz visited Light & Wonder’s booth at Global Gaming Expo in Las Vegas, as well as sampling newly acquired Grover Gaming products in Louisville, Kentucky. He came away from both impressed, views he confided in an October 11 investor note.
Katz’s thesis was, “We continue to see a strong value proposition for investors with a long-term horizon.” He thought some external factors might weigh upon Light & Wonder in the near term, but that Grover would drive growth of market share.
Thanks to the absorption of 600 Grover units, Light & Wonder’s charitable-gaming installed base now stands in excess of 11,000 devices, Katz reported. “We expect this growth trajectory to accelerate near term, given the addressable market opportunity in current states … imminent launch of charitable gaming in Indiana, medium-term plans to expand into other states including Minnesota and Maryland, as well as plans to port Light & Wonder content into Grover’s product suite in early 2026.”
Due to a dearth of publicly shared market comparisons, Katz deemed the Grover takeover “an underappreciated growth opportunity” for Light & Wonder. He allowed that the economics aren’t as eye-catching as for slot machines. To make his point, he cited Grover’s Kentucky performance: It averages $100 per device per day at a $5 maximum wager.
However, “The ability to significantly scale supports our optimism that the subsector has an estimated” $4.4 billion market potential, Katz wrote. He pointed to the prospect of additional states turning to charitable gambling. He also believed that caps on slot machines might be lifted in some jurisdictions, as Virginia has done twice already.
“That said, near-term potential stems from continued customer education and distribution,” Katz allowed. For instance, Grover’s electronic table games were said to generate three to four times as much action as paper pull-tabs have.
At its Las Vegas showcase, Light & Wonder “provided business updates for all company verticals, demonstrating an ability to balance customer priorities for the short and long term.” Katz said the company’s core goal is to expand both its market share and its terrestrial portfolio of products.
Those foci were said to be congruent with those of contemporary gambling operators. “Balanced with the expectation that digital play will continue to expand its role in the gaming ecosystem, the company continues to invest resources in its igaming offering,” Katz said, citing Light & Wonder’s 12.8 percent igaming market share in the United States. He believed its “strong Systems suite” to be another company asset.
That said, Katz felt that Light & Wonder shares are in the shadow of ongoing litigation with Aristocrat Leisure, as well as delisting from the NASDAQ. “With the delisting targeted for the end of November and our view that the lawsuit should result in a settlement before trial, estimated for June/July 2026, we reiterate our belief that these events are not impacting the company’s growth trajectory,” Katz wrote.
Light & Wonder’s 2028 estimated cash flow remains $2 billion. Katz maintained a Buy rating on the stock, as well as a $113 per share price target. LNW shares were trading at $79.35 apiece at the time of his report.
