Following the Global Gaming Expo (G23), which took position last-place calendar week inwards Las Vegas, some sell-side analysts came outside more constructive on various gaming equities, including slot machine stocks.
In a new cover to clients, Stifel’s Jeffrey Stantial observed that shares of some expansion slot simple machine manufacturers and select gambling casino operators are trading “near trough multiples,” and mergers and acquisitions chatter was elevated at G2E. Amid special signs of deteriorating demand, the analyst said his preferred one-armed bandit political machine stock ideas into the year-end are International Game Technology (NYSE: IGT) and small-cap public figure PlayAGS (NYSE: AGS).
Most one-armed bandit managers we spoke with cited largely horse barn NTM purchasing intentions, blackball a material pullback, though tailwinds from 2020/21 deferred capex are potential diminishing,” wrote Stantial. “Our 2024 estimates across the manufacturer grouping presume a ~MSD% tieback inwards the replacing cycle, which stock-still feels reasonable based on provider & customer tone of voice throughout the show.”
Among other things, G2E is often the meeting place at which slot makers roster out new games for considerateness past gambling casino slot managers.
AGS, IGT Showed Well at G2E
Citing conversations with slot buyers at G2E, Stantial customers were generally impressed past new offerings from the usual suspects, such as Aristocrat Leisure and Light & Wonder. Those companies, along with IGT, are the three-largest expansion slot suppliers in Second Earl of Guilford America.
PlayAGS was heralded past slot managers as among the most-improved firms inward the category. There are tailwinds for gaming gimmick manufacturers. Those include consumers remaining dedicated to casino visits, which provides operators with much-needed resiliency. Additionally, analysts trust supply chain pressures inwards the industry are easing.
Stantial said the stars could be aligning for one-armed bandit simple machine stocks such as PlayAGS, which has way for growth, and IGT, which has stock-specific sparks.
“Putting it all together, forecasting NTM market percentage trends remains implausibly hard with no elucidate apportion donor. As such, we run to favor small suppliers with more stuff whitespace (AGS) or suppliers with idiosyncratic catalysts (IGT),” added the analyst.
M&A Could Spark Slot Machine Stocks
Consolidation inwards the slot simple machine sphere could live poised to perk upward in the months ahead. For now, many eyes are on IGT, which proclaimed inwards June that it’s mulling strategical alternatives for its world(a) gaming and PlayDigital units.
Likewise, Stantial said smaller rival Ainsworth proclaimed at G2E that it would follow opened to acquisitions and that it would live open to offers to be acquired. There was also maunder of iGaming and online sportsbook operators mulling deals to fetch tech stacks in-house, and another familiar rumor popped upwardly at the conference.
“Lastly, MGM direction commentary on a panel indicated they finger the BetMGM JV body structure may non live optimal long-term, which joined with thwarting from sure Entain shareholders, is likely to re-surface conjecture regarding an MGM/Entain acquisition,” concluded Stantial.
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