Wall Street stock analysts met with Light & Wonder executives on May 20 as part of the company’s long-awaited Investor Day.
“As is often the case, management provided a healthy long-term outlook, while highlighting the past transformation and achievements of the business and details to achieve the future growth,” reported Deutsche Bank analyst Carlo Santarelli. He said Light & Wonder leadership laid out its strategy for reaching $2 billion in cash flow by 2028 and maintained a $1.4 billion goal for this year.
Santarelli said Light & Wonder aimed to grow cash flow 13 percent over the next three years. He noted that this exceeded Bloomberg-compiled consensus forecasts ($1.7 billion), but that the latter didn’t factor in the contribution of newly acquired Grover Gaming.
The Deutsche Bank boffin observed that Light & Wonder’s cash flow grew 2.4 percent in the first quarter of 2025, the second quarter of sub-four percent growth. The company, he said, is banking on a second-half resurgence, including entering Indiana, Minnesota, and Maryland through Grover.
Jefferies Equity Research analyst David Katz found all Light & Wonder goals “reasonable,” whether in continued sale of premium-level slot machines, igaming growth, or the Grover charitable-gambling expansion. “Ultimately, our view is that the assets and resources should benefit from a favorable landscape and execution,” he reported. Despite that, he lowered his price target from $121 per share to $116, but rated the stock a Buy.
Katz deemed Light & Wonder’s long-term targets “credible” and “reasonable given product momentum and share gain opportunities.” In social gaming, the company wants to increase its direct-to-consumer SciPlay revenue from 11 percent to 30 percent and grow its igaming presence through joint ventures and third-party deals.
The Jefferies analyst also saw “meaningful upside” from the Grover purchase, which closed May 9. The deal adds 10,000 units to Light & Wonder’s inventory immediately, plus new machines for Indiana, which launches charitable gambling on July 1.
The latter expansion is estimated at adding 1,200 units to Light & Wonder’s installed base by 2026. For the Grover inventory, Katz projected win per day of $37 per machine.
The overall installed base for charitable machines has been estimated at 35,000, growing to 43,000 by 2028. Of that, Light & Wonder now owns 26 percent. Katz projected Light & Wonder adding $45 million in cash flow in 2025 and $187 million next year.
The company said it expects its differences with Aristocrat Leisure to go to court. Katz added, “It is confident in its position, reiterating that third-party review of older games concluded that there had been no use of Aristocrat math in games from 2015 forward.”
Another analyst putting a Buy rating on Light & Wonder was Truist Securities’s Barry Jonas. He felt that, post-Grover, Light & Wonder would have to increase its cash flow only 10 percent per year to achieve its targets.
“While shares were slightly off today amidst broader market weakness (though ahead of gaming comps), the $2B met our expectations and we think shares can go higher from here,” Jonas recounted. He kept his price target at $110 per share.
Light & Wonder carried a 10.5 debt-to-cash-flow ratio in 2020 and had lowered that to three times by the first quarter of 2025. It expected that, even with the $850 million Grover purchase, it will be leveraged no more than 3.5 times and perhaps as low as 2.5 times.
Jonas observed that Light & Wonder’s growth of its revenue by 13 percent and its cash flow by 17 percent “compares favorably to the rest of the market’s revenue/EBITDA growth,” which averaged 5.5 percent.
He also noted that the company has enjoyed 19 straight quarters of growth in its premium installed-slot base. In social gaming, SciPlay had outperformed the broader market for 13 consecutive quarters. Investments in research and development and products grew 28 percent in that time.
