Experts maintain their initial forecasts regarding Light & Wonder
Light & Wonder's Q4 Performance
United States 📊 Suppliers 🎲 Light & Wonder David McKee, our guy
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It's safe to say Wall Street wasn't too upset about Light & Wonder's Q4 results. And the ratings remained unchanged, with no price target hikes.
Deutsche Bank's Carlo Santarelli kept a Hold rating and $89 per share price target, a far cry from the stock's closing price of $101.63 on Feb 25. He pointed out that Light & Wonder had barely surpassed both his and Wall Street's expectations, growth mainly fueled by margin improvements, except in igaming. Income was just a smidge below expectations.
Nothing groundbreaking, right? Well, let's dive deeper. Santarelli highlighted some key points from the call, including Light & Wonder buying back 2.6 million shares of LNW and settling an intellectual-property dispute with TCS John Huxley (a lawsuit inherited from Light & Wonder's precursor Scientific Games) for $72.5 million.
Truist Securities specialist Barry Jonas emphasized that Light & Wonder's Q4 cash flow was higher by 4% than anticipated, despite pulling Dragon Train games from American casino floors. He mentioned that a revamped Dragon Train 2.0 version was scheduled for August launch in Australia, where the original hasn't faced any injunctions.
Management declared that it had smoothly navigated past the Dragon Train injunction, managing to focus on other brands and now expecting the segment to return to regular growth in 2025. Interestingly, Jonas estimated that Light & Wonder only lost about 100 slot machines in North America post-Dragon Train, ultimately replacing 95 of them with other L&W titles.
Jonas refrained from changing his $115 per share price target, keeping his Buy rating.
Next up was Jefferies Equity Research analyst David Katz. He praised Light & Wonder's persistent growth in brick-and-mortar casinos and highlighted that the company's Q4 revenue surpassed Katz's predictions. Katz attributed the Oregon and Canada markets as the primary drivers behind growth.
While specific details on the forecasted cash flow growth for Light & Wonder in 2025 are scant, Katz projected the company to add $45 million in cash flow in 2025. For more extensive financial projections, Light & Wonder is aiming for $1.4 billion in Adjusted EBITDA for 2025.
Light & Wonder gained 2,784 machines in general and 853 devices in Q4, specifically. No worries about those numbers dropping as gains in American gaming operations nicely balanced out setbacks elsewhere.
However, international installations took a tumble. Light & Wonder lost 2,162 units YoY and 1,261 machines in Q4 alone. Light & Wonder managed to edge past Santarelli's domestic sales forecast by 455 devices, but fell 2,630 machines short overseas, which Jonas attributed to "unfavorable timing and tough comps out of Europe last year."
Eyeing the future, Jonas spotlighted Macau, the Philippines, and the United Arab Emirates as prime targets for Light & Wonder's market expansion. He also hinted that the May 2023 investor event would have investors curious and ready to learn about "what the next phase of growth for the company looks like."
The finance-related discussion about Light & Wonder's Q4 results indicates that investors are carefully watching the company's business growth, particularly in the igaming segment. In the context of investing, Deutsche Bank's Carlo Santarelli kept a Hold rating and maintained a price target for Light & Wonder, signifying a cautious approach toward the company's shares. On the other hand, Truist Securities specialist Barry Jonas reaffirmed his Buy rating and price target, indicating a positive outlook for investing in Light & Wonder, given the company's financial performance and expected growth in various markets.
