PlayAGS (NYSE: AGS) reported fourth-quarter earnings and revenue that were near the top side oddment of antecedently disclosed guidance. Looking further out, the slot political machine manufacturing business can buoy potentially seize marketplace share amid industry consolidation.
That could facilitate more gains for a stock up that’s up 8.19% year-to-date and acutely outperforming major small-cap indexes. Relative to its peer group, PlayAGS is discounted, which could follow a seed of charm for some investors when the accompany is firming its financial position.
The Second Earl of Guilford American slot securities industry remains hyper-competitive, though we suppose the recently proclaimed EVRI/IGT may succumb securities industry portion out opportunities for AGS – inwards specific in mechanical Scottish reel where AGS plans to debut their maiden product late-24,” wrote Stifel psychoanalyst Jeffrey Stantial inwards take down to clients. “All-told, we bear on to reckon a highly favorable setup for AGS inwards 2024 discounted inward electric current valuation.”
He’s referencing the $6.2 1000000000000 transaction announced lowest hebdomad inwards which International Game Technology’s (NYSE: IGT) global gaming and PlayDigital units will merge with PlayAGS competition Everi (NYSE: EVRI).
Bullish Outlook for PlayAGS
Citing the company’s strong expansion slot momentum heading into 2024, Stantial reiterated a “buy” rating and $12 damage mark on PlayAGS. That implies upside of 30.4% from the March 5 close.
The pig thesis on PlayAGS is supported past factors such as calm wagering trends, a warm mathematical product pipeline, and improving relationships with high-altitude incorporated customers, among other catalysts. Additionally, the investment thesis could follow supported by the enlargement of tribal gaming clients in Florida, Texas, and Oklahoma. Stantial noted the troupe outperformed rivals such as Konami and Light & Wonder (NASDAQ: LNW) inward the fourth billet in terms of for cut-rate sale slots.
“Relative outperformance is specially remarkable given limited donation from the of late launched Spectra UR49C (where qualitative commentary on initial performance was encouraging),” observed the analyst. “Average merchandising prices (ASPs) were upwardly +7% Y/Y, also comparing favourably vs. peers reporting thusly far (-14% to +10%), with direction citing mix in tailwinds from the Spectra family (which comprised >80% of Q4 shipments).”
More Catalysts for PlayAGS
In gain to efforts to dramatically slim down leverage, PlayAGS has other catalysts that could live attractive. Those include the aforementioned discounted multiples and strong, multi-month visibility on electronic gaming simple machine shipments.
Additionally, the guidance pertaining to 2024 shipments offered upward by PlayAGS direction was strong, indicating the accompany could advance portion inward certain areas of the slot market. That’s polar at a clip when operators are adding more gaming machines to casino floors.
“AGS also continues to broaden client get to (~180 customers sold-to during Q4, upward from 150 in Q3), supplementing higher ordinary enjoin size of it (a mapping of greater cognitive content & ironware diversity). Additionally, direction emphasized modest uplift from traction in international markets (largely LatAm) with new strain factors,” concluded Stantial.
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