B.Riley Boosts Light & Wonder's Stock Target
Recently, B.Riley resumed coverage on Light & Wonder (NASDAQ: LNW), emphasizing its strong market position by assigning a Buy rating along with an increased price target of $120. This notable evaluation is rooted in the firm's analysis that suggests the company's enterprise value to earnings before interest, taxes, depreciation, and amortization (EV/EBITDA) is approximately 40% below that of its nearest competitor. In addition, Light & Wonder's current valuation is 13% below its historical average, presenting a potentially lucrative opportunity for investors.
Key Strengths in a Competitive Landscape
The analyst highlighted several crucial attributes that solidify Light & Wonder's status within the industry, particularly its significantly de-levered balance sheet and effective policies for returning capital to shareholders. Despite experiencing setbacks, such as a stock price decline prompted by a preliminary injunction against its Dragon Train franchise, B.Riley perceives these challenges as gateways for entry, providing a more appealing prospect for prospective investors.
Market Share and Future Growth Potential
Looking ahead, Light & Wonder is poised for continued market share gains throughout the fiscal year 2026. This growth trajectory is attributed to an expansion in its product lines, entry into new market segments, and the potential for market disruptions stemming from mergers and acquisitions among industry competitors. Furthermore, the company's digital social casino platform, SciPlay (NASDAQ: SCPL), is noted for outperforming the broader industry, with B.Riley foreseeing considerable long-term synergies across the various platforms operated by Light & Wonder.
Leadership in the iGaming Sector
Light & Wonder's preeminent role in the iGaming sector, especially in the U.S. online slots market, positions it favorably, as it commands the highest gross gaming revenue share. The analyst predicts an array of growth opportunities in the company's nascent endeavors within live dealer games, further bolstering B.Riley's optimistic outlook on the stock. Recent reports suggested that Light & Wonder has achieved a 12% increase in consolidated revenue to $818 million for Q2, with operating income rising to $175 million. These significant improvements underscore the company's ongoing financial strength.
Commitment to Growth Amid Challenges
Additionally, Light & Wonder has launched a $1 billion share repurchase program, with aspirations to reach an adjusted EBITDA target of $1.4 billion by 2025. Despite the setbacks surrounding the Dragon Train franchise, the company remains resolute in maintaining its financial targets. While some firms, including Stifel and Susquehanna, revised their target prices to $100 and $90 respectively, due to the ongoing legal concerns, other firms, such as Benchmark and UBS, have reaffirmed their Buy ratings. Recently, Maxim Group joined the ranks, initiating coverage with a Buy rating and a revised price target of $144, projecting a sales growth of 11% in 2024 followed by 8% in 2025.
To further strengthen investor confidence, Light & Wonder has maintained transparency regarding its regulatory compliance efforts, highlighted by a recent update to the Australian Securities Exchange concerning its CHESS Depositary Interests. These ongoing initiatives showcase the company's resilience and are a testament to its unwavering commitment to growth despite encountering legal obstacles.
Frequently Asked Questions
What is B.Riley's current rating on Light & Wonder?
B.Riley has resumed coverage of Light & Wonder with a Buy rating and an increased price target of $120.
How has Light & Wonder performed in terms of revenue?
The company reported a 12% increase in Q2 consolidated revenue to $818 million alongside an operating income of $175 million.
What are the growth prospects for Light & Wonder?
Analysts predict continued market share gains through 2026, fueled by product expansion and entry into new categories.
How does Light & Wonder rank in the iGaming sector?
Light & Wonder is recognized as a leader in iGaming, holding the highest gross gaming revenue share in U.S. online slots.
What recent developments have occurred for Light & Wonder?
The company launched a $1 billion share repurchase program and set adjusted EBITDA targets, underscoring its commitment to growth and compliance.
