IGT Earns Price Target Lift on Divestment Plans
Earlier this month, International Game Technology (NYSE: IGT) proclaimed plans to explore strategical alternatives for its worldwide gaming and PlayDigital units — tidings that’s been well-received past analysts and investors.
In a new cover to clients, Stifel analyst Jeffrey Stantial reiterates a “buy” rating on IGT spell lifting his terms butt on the stock up to $38 from $32. That implies upside of 25% from the June 23 close. It’s possible that IGT could merge, sell, or spin-off those businesses. The society noted it could also continue those segments and increment related to investment. However, analysts scene sales or spin-offs as the to the highest degree potential outcomes.
Our to the highest degree salient takeaways from this analysis include: 1) at that place is a larger exercise set of addressable buyers than suspicion would suggest, 2) Global Gaming margin enlargement possible & positioning for the hyper-growth iCasino content opportunity wee IGT an attractive mark for both financial & strategic buyers,” noted Stantial.
Should IGT at last disinvest its global gaming and PlayDigital operations, the young keep company would live a standalone lottery entity, single potential to “re-rate higher,” added Stantial.
For IGT, Good Time to Consider Spin-Offs
In Nov 2021, IGT revealed it would deliberate a spin-off of its iGaming and sports wagering unit, but related sue was limited until this month.
For years, analysts and investors pondered if and when the fellowship would judge separating its worldwide gaming business sector so that its extremely profitable lottery gird could catch more credit inwards the investment funds community. Over that period, IGT’s plank and direction squad were reluctant to explore such a transaction, but perspectives come out to make shifted.
“We high spot the stock-still recent modulation inwards leadership, with electric current CEO, Vince Sadusky, bringing unexampled linear perspective to the business, much of which is informed past his receive remote the gaming industry,” added Stantial. “Similarly, we wait former CEO Marco Sala brought impudent linear perspective to IGT’s largest shareholder after transitioning to CEO of De Agostini (note De Agostini currently holds ~62% voting power).”
Should the company parting with the world-wide gaming and PlayDigital units, it’s possible that its lottery business, which accounts for 75% of pro-forma earnings, testament finally catch the esteem it deserves from investors.
IGT Global Gaming Unit Could Attract Variety of Suitors
While IGT hasn’t formally declared whether the aforementioned segments testament live sold or spun off, in that location could live momentum to sell the world(a) gaming building block because that stage business is improving and could attract a change of suitors armed with compelling offers.
Over the past times several years, IGT has sleek that concern by selling noncore assets — moves that have got resulted inward cost savings of to a greater extent than $210 million. With casinos upgrading slot machines, the business concern could live attractive to buyers. IGT is I of the top of the inning trinity one-armed bandit manufacturers inwards Second Earl of Guilford America by market place share.
“IGT’s market-leading portion for VLTs and bartops has also proven stickier than feared followers militant launches,” concluded Stantial. “Certainly contention in the N.A. expansion slot market place is as vivid as ever with strong production from most major suppliers, though it seems evident IGT has at lower limit stabilised marketplace deal followers ~1.5 decades of bleed, arguably regular showing some reasons to follow optimistic on further apportion gains o'er the next several years.”
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