In a dazzling display of financial foresight, Light & Wonder, the gaming device juggernaut, is setting the industry ablaze with projections that their 2025 EBITDA will not only hit the mark but potentially exceed the $1.4 billion forecast disclosed a mere two years ago. This potent prediction comes courtesy of the sharp minds at JPMorgan, who are championing the company’s fiscal future with an expected upside of 2% to 5% above current consensus forecasts for the period spanning 2023 to 2025.
Bolstered by an arsenal of brand-new slot machine titles that are captivating the casino-goers down under, Light & Wonder finds itself basking in the glow of early successes. The launch of the Dragon Train family of games, in particular, has proven to be a coup, garnering praise for its swift embrace by the Australian market.
Since rolling out their Dragon series last August, Light & Wonder has made strategic moves to dominate the Australian gambling landscape. Their commitment to the region was solidified with a secondary listing on the Australian Securities Exchange (ASX) in May, further enticing players with the promising potential of the Dragon game series. Thanks to this move, average turnover ratios are soaring, with impressive jumps in key regions like New South Wales and Queensland.
But the story of Light & Wonder doesn’t stop at game performance. The company is painting an increasingly attractive picture with its financial brushstrokes – it’s a tale of burgeoning free cash flow narratives enriched by swiftly retreating debt levels. In the fiscal masterpiece of 2021, the sale of its lottery and sports betting branches generated a princely sum of $7 billion. That influx of cash was astutely deployed to curtail debt and strategically repurchase shares, further strengthening the company’s economic standing.
It appears that the third quarter of 2023 marked the moment when Light & Wonder proudly achieved its targeted EBITDA-to-free-cash-flow conversion, with JPMorgan’s crystal ball predicting a continued uptrend in this department.
Seeking a springboard for their stock, Light & Wonder is eyeing the late February release of its fourth-quarter results with the sort of anticipation usually reserved for a jackpot payout. The firm’s recent history of triumphantly beating earnings per share (EPS) estimates, coupled with an impressive six-quarter streak of outperforming Wall Street’s revenue predictions, suggests that more favorable fortunes lie ahead.
Adding fuel to the speculative fire is the possibility that analysts might revise their price targets skyward as Light & Wonder’s shares ascend to new heights. With current prognostications pitching the stock at an optimistic $93.75, there’s a hearty 13.70% upside to be had.
When it comes to analyst opinions, Light & Wonder basks in the warm embrace of approval, with a majority casting “strong buy” ratings and a handful offering nods of agreement to this bullish sentiment, reflectively balancing the scales between confidence and caution.
