Posted on: October 16, 2023, 04:26h.
Final up to date on: October 16, 2023, 04:32h.
Following the World Gaming Expo (G23), which passed off final week in Las Vegas, some sell-side analysts got here away extra constructive on varied gaming equities, together with slot machine shares.
In a brand new report back to shoppers, Stifel’s Jeffrey Stantial noticed that shares of some slot machine producers and choose on line casino operators are buying and selling “close to trough multiples,” and mergers and acquisitions chatter was elevated at G2E. Amid restricted indicators of deteriorating demand, the analyst stated his most well-liked slot machine inventory concepts into the year-end are Worldwide Sport Know-how (NYSE: IGT) and small-cap title PlayAGS (NYSE: AGS).
Most slot managers we spoke with cited largely steady NTM buying intentions, barring a cloth pullback, although tailwinds from 2020/21 deferred capex are seemingly diminishing,” wrote Stantial. “Our 2024 estimates throughout the producer group presume a ~MSD% pullback within the alternative cycle, which nonetheless feels cheap based mostly on provider & buyer tone all through the present.”
Amongst different issues, G2E is usually the discussion board at which slot makers roll out new video games for consideration by on line casino slot managers.
AGS, IGT Confirmed Effectively at G2E
Citing conversations with slot consumers at G2E, Stantial clients have been broadly impressed by new choices from the same old suspects, corresponding to Aristocrat Leisure and Mild & Marvel. These firms, together with IGT, are the three-largest slot suppliers in North America.
PlayAGS was heralded by slot managers as among the many most-improved companies within the class. There are tailwinds for gaming machine producers. These embrace shoppers remaining devoted to on line casino visits, which supplies operators with much-needed resiliency. Moreover, analysts consider provide chain pressures within the business are easing.
Stantial stated the celebs might be aligning for slot machine shares corresponding to PlayAGS, which has room for development, and IGT, which has stock-specific sparks.
“Placing all of it collectively, forecasting NTM market share developments stays extremely tough with no clear share donor. As such, we are inclined to favor small suppliers with extra materials whitespace (AGS) or suppliers with idiosyncratic catalysts (IGT),” added the analyst.
M&A Might Spark Slot Machine Shares
Consolidation within the slot machine sector might be poised to perk up within the months forward. For now, many eyes are on IGT, which introduced in June that it’s mulling strategic options for its world gaming and PlayDigital items.
Likewise, Stantial stated smaller rival Ainsworth proclaimed at G2E that it could be open to acquisitions and that it could be receptive to provides to be acquired. There was additionally chatter of iGaming and on-line sportsbook operators mulling offers to convey tech stacks in-house, and one other acquainted rumor popped up on the convention.
“Lastly, MGM administration commentary on a panel indicated they really feel the BetMGM JV construction might not be optimum long-term, which coupled with frustration from sure Entain shareholders, is prone to re-surface hypothesis concerning an MGM/Entain acquisition,” concluded Stantial.