IGT sees its shares slump but analyst predicts sharp market rebound

Article by : Charles Perrin Nov 14, 2023

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IGT has seen its shares crash, but it can shift the momentum and turn things around, according to an analyst.

The formidable slot machine manufacturer and lottery provider, which is listed on the New York Stock Exchange, has presided over a 13.37% decline in its shares over the past month.

With a constant stream of negative stock returns posted, this has only served to strengthen or even surpass the notion of a bear market.

But Jeffrey Stantial, who works as an analyst for brokerage and investment banking firm Stifel, is of the opinion that IGT’s slump should be no cause for concern, although he admitted slots remain the key financial driver for the company.

He said: “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 above 2019A levels.”

Stantial suggested that IGT should look to “buy” with a $35 price target which suggested a 32% increase when the markets closed on Monday.

Although IGT has a proven track record of developing engaging casino slots, Stantial believes that the lottery side of the business has been rather overlooked and that it should be more appreciated.

Indeed, Stantial believes that IGT, which has been weighing up whether to sell its global gaming and PlayDigital units, would benefit from drawing more attention to the lottery arm of the business.

He added: “Should IGT proceed with divesting those businesses, it would get the company out of the ultra-competitive slot machine space while cleaning up the broader investment thesis, likely bringing the highly profitable lottery unit into focus for investors.

“Even if the sale of the slot unit isn’t imminent, IGT can thrive in an increasingly competitive landscape.”

Last month, IGT’s gaming revenue figures indicated they were stable, and that has set a $4billion end-of-year target for itself.

There has been plenty of speculation surrounding IGT, especially with private equity firm Apollo Global circling, but if IGT can ride out the storm, then it could be in robust shape for 2024.