Wall Street Bets is a roundup of recent notes from analysts covering the gambling industry.
Light & Wonder
Truist Securities analyst Barry Jonas, in a March 21 post, commented on meetings the company hosted with Light & Wonder CEO Matt Wilson, Chief Financial Officer Oliver Chow, and Nick Zangari of Investor Relations.
“Management sounded positive on hitting its $1.4B 2025 Adjusted EBITDA target, with areas for upside/cushion, while growth should continue beyond 2025. 2024 should be a strong year, potentially boosted from the ‘chaos’ of the IGT/Everi deal,” Jonas wrote. “We remain Buy rated, noting continued divergence across our coverage (and beyond) as high quality, scaled growth companies continue to enjoy higher multiples, with Light & Wonder also benefiting from a growing Aussie investor base.”
Scientific Games
In a March 21 note, Fitch Ratings affirmed Scientific Game’s rating as B, adding that the ratings outlook is stable.
In a statement, Fitch noted that “The ‘B’ issuer default rating reflects Scientific Games Lottery’s high leverage as well as its solid market position in the lottery industry that generates high margins, durable cash flows and discretionary free cash flow, despite a combination of price pressures and high interest rates which have delayed deleveraging through both EBITDA growth and debt prepayments. Fitch expects new contract wins and softening input prices to support free cash flow in 2024. Fitch also recognizes several cash outflows were one-time in nature related to the 2022 Light & Wonder divestiture. Future deleveraging is expected through either voluntary prepayments or EBITDA growth.”
Gambling.com
Gambling.com’s 2024 4Q results drew interest from analysts.
David Katz of Jefferies wrote in a March 24 note that” The strong quarterly performance demonstrated revenue growth in most geographical regions, specifically North America, which we believe should be taken positively. Management emphasized Financial Year ‘24 growth will be driven by the company’s ability to grow organically, recent strategic partnerships, and launch of North Carolina online sports betting. Despite neutral revenue and EBITDA guidance, Gambling presents a solid opportunity for growth and stock upside, in our view. Reiterate Buy.”
Truist Securities’ Jonas also commented on Gambling.com. In a March 21 note, Jonas wrote that Gambling’s “Q4 Adjusted EBITDA beat our/Street estimates on record revenues from strong North American performance, including new states and ESPN Bet’s launch. Gambling acquired Freebets.com, which it expects to be immediately accretive and drive strong growth in Europe. 2024 guidance was introduced, though prior Street estimates were above the mid-point of new guide (excluding mergers & acquisitions). We remain Buy-rated seeing upside from new markets and potential integration improvements on the new acquisition, and raise 24E/25E adjusted EBITDA +7%/+14% on mergers & acquisitions. Maintain $13 price target.”
Macau
Katz also commented on Jefferies’ Asia Forum and Tour, noting that “Macau’s revenue continues to track ahead of expectations with industry sources raising the monthly forecast for the second time, but we expect only a neutral reaction. Key takeaways: 1) Fight for market share, particularly at high-end premium mass; 2) Macau remains the near-term destination of choice especially after recent Singapore cross-border gambling comments; and 3) China GDP could be the long-term trend line for GGR growth.”
