Wall Street Bets is a roundup of recent notes from analysts covering the gambling industry.
In a June 12 recap of last week’s gaming news, Jefferies Equity Analyst David Katz commented on IGT’s board of directors considering options including a sale, merger, or spin-off of its Global Gaming and PlayDigital segments.
“The debate as we see it is the valuation on both remaining lottery business, which has traded at 7-8.5X EBITDA and the breadth of potentially buyers and capital markets support,” Katz wrote. “Our view is that the business has performed solidly if unremarkably, and the endeavor for a higher valuation overall is likely enabled by splitting the businesses. If successful, as it has been for peer Light & Wonder, the event could bring forth Everi, which has also been challenged to maintain a multiple.”
Truist Securities analyst C. Patrick Scholes June 7 on U.S. lodging trends: Similar to the past year in lodging (and many other) stocks, we see “macro over micro” at the moment. We see the main driver/wildcard coming from the economic impact from interest rates and inflation (and perhaps more importantly investor sentiment around these). While the risks from COVID are not zero (e.g., China reopening impact to the worldwide economy and outbound Chinese travel), we believe COVID issues are now secondary to macroeconomic considerations for most investors and for public company executives.
Analyst Joseph Greff of J. P. Morgan, in a June 12 analyst’s note about the Indiana Gaming Commission’s May results: “Statewide casino revenues were $191.0 million, down 7% year-over-year and 11% higher than in May 2019. On a comparable basis (ex. Hard Rock Casino, which opened May 2021 under one of the Majestic Star licenses), GGR for the month was down 1% versus 2019. We note that to provide a true apples-to-apples (year-over-year) comparison, we have added the free play deductions back to the property AGR totals for the month. Total sports betting revenues for the month were $33.8 million, up 10% year-over-year, as handle decreased 8%, but hold was 11.9% (up 200 base points).”
