PlayAGS Can Add Market Share In 2024, Says Analyst

Posted on: March 6, 2024, 02:56h. 

Final up to date on: March 6, 2024, 02:56h.

PlayAGS (NYSE: AGS) reported fourth-quarter earnings and income that had been close to the highest finish of beforehand disclosed steering. Trying additional out, the slot machine producer can probably seize market share amid business consolidation.

PlayAGS slot machines, seen above. An analyst believes the corporate can achieve market share this 12 months. (Picture: PlayAGS)

That might facilitate extra positive factors for a inventory that’s up 8.19% year-to-date and sharply outperforming main small-cap indexes. Relative to its peer group, PlayAGS is discounted, which could possibly be a supply of attraction for some buyers when the corporate is firming its monetary place.

The North American  slot market stays hyper-competitive, although we expect the not too long ago introduced EVRI/IGT could yield market share alternatives for AGS – particularly in mechanical reel the place AGS plans to debut their inaugural product late-24,” wrote Stifel analyst Jeffrey Stantial in observe to purchasers. “All-told, we proceed to see a extremely favorable setup for AGS in 2024 discounted in present valuation.”

He’s referencing the $6.2 billion transaction introduced final week by which Worldwide Sport Know-how’s (NYSE: IGT) world gaming and PlayDigital models will merge with PlayAGS rival Everi (NYSE: EVRI).

Bullish Outlook for PlayAGS

Citing the corporate’s robust slot momentum heading into 2024, Stantial reiterated a “purchase” score and $12 worth goal on PlayAGS. That suggests upside of 30.4% from the March 5 shut.

The bull thesis on PlayAGS is supported by elements corresponding to regular wagering tendencies, a powerful product pipeline, and bettering relationships with high-level company prospects, amongst different catalysts. Moreover, the funding thesis could possibly be supported by the growth of tribal gaming purchasers in Florida, Texas, and Oklahoma. Stantial famous the corporate outperformed rivals corresponding to Konami and Mild & Marvel (NASDAQ: LNW) within the fourth quarter by way of on the market slots.

“Relative outperformance is especially noteworthy given restricted contribution from the not too long ago launched Spectra UR49C (the place qualitative commentary on preliminary efficiency was encouraging),” noticed the analyst. “Common promoting costs (ASPs) had been up +7% Y/Y, additionally evaluating favorably vs. friends reporting up to now (-14% to +10%), with administration citing combine tailwinds from the Spectra household (which comprised >80% of This autumn shipments).”

Extra Catalysts for PlayAGS

Along with efforts to dramatically scale back leverage, PlayAGS has different catalysts that could possibly be engaging. These embody the aforementioned discounted multiples and powerful, multi-month visibility on digital gaming machine shipments.

Moreover, the steering pertaining to 2024 shipments supplied up by PlayAGS administration was robust, indicating the corporate may achieve share in sure areas of the slot market. That’s pivotal at a time when operators are including extra gaming machines to on line casino flooring.

“AGS additionally continues to broaden buyer attain (~180 prospects sold-to throughout This autumn, up from 150 in Q3), supplementing larger common order dimension (a operate of larger content material & {hardware} range). Moreover, administration emphasised modest uplift from traction in worldwide markets (largely LatAm) with new kind elements,” concluded Stantial.

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