International gaming technology: how much growth is left?
IInternational gaming technology (IGT) the stock price has skyrocketed over the past year, gaining over 107%.
I expect the company’s outlook for 2021 will provide solid support for the upside in stock prices for several weeks to come. So, I am bullish on this title. (See Best Analyst Stocks on TipRanks)
International Game Technology is a global gaming leader, targeting growth through player engagement in its gaming machines, lotteries and sports betting services. Its customers also use digital entertainment from International Game Technology.
The company operates throughout the UK, where the City of London is the main office. International Game Technology also has an international presence in over 100 countries with regulated markets for gaming and betting.
3rd Quarter Profits
Total revenue increased significantly in the third quarter of 2021. It reached $ 984 million, an increase of almost 21% year-over-year. Revenue did better than expected, beating analysts’ forecasts by $ 3 million.
In terms of year-over-year revenue growth, Global Lottery was up 14%, Global Gaming was up 33.8% and Digital & Betting was up 37%.
Global Lottery business accounted for 66.2% of total revenue, Global Gaming accounted for 29.4%, while Digital & Betting added 4.4% to total.
Three factors are mainly responsible for the transition to GAAP of earnings of $ 0.31 per share in the third quarter of 2021, compared to a net loss of $ 0.62 per share in the previous year quarter.
Higher sales and the implementation of an effective management and cost reduction policy combined with favorable rates in the foreign exchange markets to stimulate the recovery.
The company also beat analysts in terms of earnings per share by an average of $ 0.22.
Adjusted EBITDA was $ 407 million in the quarter compared to $ 287 million a year ago.
Thanks to strong cash flow from ongoing operations and the sale of a games business in Italy, International Game Technology’s net debt position improved to $ 6.1 billion in the third quarter 2021, up from $ 7.3 billion in the last quarter of 2020 Net debt leverage fell from 6.4x to 3.8x.
Path to growth
These markets are expected to grow tremendously as technology introduces new ways of playing and betting, and as more and more countries increasingly welcome these activities.
A multi-year agreement signed with Cliff Castle Casino located in Camp Verde, Arizona, will allow International Game Technology to benefit from the strong expansion in the sports betting market in Arizona. International Game Technology wishes to enrich the gambling house’s sports betting retail so as to attract more players and increase the time spent at the Casino.
Overall, International Game Technology’s business is expected to continue to capitalize on positive trends in gambling and betting.
The company is targeting total revenue of around $ 4.1 billion, compared to analysts’ average projection of $ 4.07 billion for the year 2021.
The company also expects operating income of $ 900 million and operating cash flow of $ 850 to $ 900 million.
The Taking of Wall Street
In the past three months, four Wall Street analysts have released a 12-month price target for IGT.
The average price target for International Game Technology is $ 46.33, which implies an upside potential of 84.1%. The company has a strong buy consensus rating, based on three awarded buys, one hold and zero sells.
The stock is well positioned to see its shares rise steadily, but gambling and betting must remain favorable. In general, these activities create an addiction that keeps the consumer coming back.
Disclosure: At the time of publication, Alberto Abaterusso does not have a position in any of the titles mentioned in this article.
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