The shares of IGT or International Game Technology are off 13.37% right over the last month and are around 22% to the primary downside eliminated from the 52-week high of the stocks. This exceeds the basic definition of the whole bear market.
But about one analyst continues to believe that the slump is simply more the result obtained from conjectures instead of a detailed commentary on foundational issues.
Jeffrey Stantial, an analyst at Stifel, in the latest report to clients, happened to rate the slot machine manufacturer and lottery provider ‘purchase’ with a 35-dollar price target, actually implying the pros of 32%, and that too from today’s close.
Since the stock is actually slumping, IGT has multiple tailwinds. It includes a very steady upgrade cycle for stocks. Stantial wrote, “Given historical cyclicality & misconstrued operator commentary this earnings season, we see more outsized investor focus on the slot replacement cycle. Management cited a robust pipeline through year-end, though acknowledging that longer-term visibility remains limited – especially with North American replacements demand still running solidly (est. mid-teens% in Q2A) above 2019A levels.”
Among the different slot titles, IGT happens to be the manufacturer of the iconic Wheel of Fortune. These are amongst the most well-known slots in US-based casinos.
IGT Lottery Biz Still Attractive:
After the recent spate of some historic highs, such as the Powerball and Mega Millions jackpots, the IGT management also noted that there are multiple signs of ‘jackpot fatigue.’
But that does not dent the total thesis for the most underappreciated lottery unit of IGT. The lottery business of IGT accounts for about 75% of earnings that are pro-forma and happens to be a major earning before amortization driver (EBITDA), depreciation, taxes, undervalued relative, and interest competing assets.
Still, information indicates sales of domestic lotteries are rising this year. Historically, the lottery has been only a simple segment of the entire gaming industry. When consumers actually dial back any discretionary spending, this proves to be sturdy. In this context, Stantial said, “Our checks show U.S. multi-state jackpot sales are trending ~80% higher than 2019A year-to-date. When assessed in totality, lottery demand remains robust & likely resilient even should the consumer pullback (recall U.S. lottery sales declined less than 1% peak-to-trough during the global financial crisis.).”