PlayAGS had its initial public offering in January, and the company is already quickly getting used to collecting accolades from the investment community.
Union Gaming Group analyst John DeCree, in a May 29 research report, said the Las Vegas-based casino equipment manufacturer is gaining traction beyond the Native American casino market, where it still holds a 20 percent market share.
DeCree gave the company – traded on the New York Stock Exchange under the symbol AGS – a buy rating, with a $30 per-share price target in initiating coverage.
“PlayAGS is in the very early innings of expanding into the Class III electronic gaming machine market in North America and has a significant white space opportunity to enter new jurisdictions,” DeCree wrote.
He told investors that casino operators are projecting to purchase 5 to 6 percent of all new gaming machines from PlayAGS.
The company was founded in 2005, but a 2013 acquisition by private equity firm Apollo Global Management allowed the company to expand both its product line and its research and development capabilities.
After the Apollo deal, PlayAGS acquired some 20 different small equipment providers and design studios. The transformational deal came in 2015, with the company’s purchase of slot machine maker Cadillac Jack for $375 million. PlayAGS has since grown to a staff of 550, with design studios in Atlanta; Austin, Texas; and Sydney, Australia.
DeCree said 80 percent of PlayAGS revenue is generated through contracts in which the company shares with casino operators the revenue produced by its gaming machines.
He also said PlayAGS is growing in direct sales, where casinos purchase their own games, according to recent surveys of casino slot machine executives.
“This strong performance is also enabling PlayAGS’s portfolio optimization initiative, whereby it is upgrading its legacy installed base of domestic electronic gaming machines and achieving an estimated 30 percent average increase in revenue per day,” DeCree wrote.
He said the company “is also poised to grow” its table game products and interactive segments and to expand internationally. PlayAGS’s first electronic gaming machines are expected to go live in the Philippines by the end of June.
“We see several avenues of growth ahead for PlayAGS, and a talented management team in place to execute (them),” DeCree said.
Howard Stutz is the executive editor of CDC Gaming. He can be reached at hstutz@cdcgamingreports.com. Follow @howardstutz on Twitter.
