NeoGames Buying Opportunity Afoot Following Post-Earnings Slide, Says Analyst
NeoGames (NASDAQ:NGMS) stock tumbled nearly 15 percent Thursday next its second-quarter earnings update, and that sliding board is continuing today. But i psychoanalyst called reaction to the results “puzzling” while noting a purchasing opportunity inward shares of the online lottery operators is now afoot.
In a note to clients released later(a) Thursday, Stifel analyst Steven Wieczynski reiterates a “buy” rating on the cyberspace drawing provider, with a $71 terms target. That implies upside of nearly 49 percent from the Aug. 12 close.
Management also cited growing awareness/momentum for iLottery expanding upon with state regulators. While the province session calendar has slowed up, we consider this bodes swell for off-peak sessions and the 2022 setup,” said the analyst.
He sees room for more upside, as investors reassess views on cyberspace casino and sports betting equities. That could instigate them to pass judgment the still unnoted iLottery industry.
NeoGames Q2 Results Were Strong
Reaction to NeoGames’ results for the June quarter may indeed follow puzzling, because the Israeli gaming accompany reported revenue of $21.4 million, easily beating the Wall Street consensus approximate of $18 million. The operator also lifted its 2021 sales outlook past III percent.
Wieczynski says the selloff could live attributable to investors overreacting to competition inward stops — NeoGames’ biggest US market place — from online cassino and sports betting rivals. The analyst calls concerns “overblown,” spell highlighting the company’s impressive ramp-up inwards Alberta, Canada.
“Management cited an expanding offering and full general strength inward Alberta as cay drivers inward Q2 outperformance,” he said.
In the US, NeoGames is also operational inward New Hampshire, North Carolina, and Virginia, and is pursuing iLottery contracts inwards Alaska, Connecticut, Maryland, Massachusetts, Missouri, Ohio, and Oregon. On a group discussion claim with analysts, NeoGames direction discussed increasing state-level sentience of net drawing as a tax revenue generator.
As is the instance with iGaming and sports betting rivals, more commonwealth legalization would be a positive catalyst for NeoGames and perhaps its part price.
NeoGames Stock Has Growth Potential
While it doesn’t bring forth bombinate on par with cyberspace casinos or sports betting, iLottery is growing. Data confirms as much, and that could be a prescribed for NeoGames stock.
“2Q21 iLottery receipts sales (wagers) increased +18% y/y, but decreased -10% q/q to $1.2 billion. The yearbook growth was goaded past a combination of factors, including sustained macroeconomic tailwinds (Federal financial support, declining unemployment, rising wages, elevated discretionary income), warm underlying ontogeny trends among many markets, and young market place growth,” according to Eilers & Krejcik Gaming.
Stifel’s Wieczynski says NeoGames’ steering reflects a 21 percent sequential decline, which is likely contributing to the weakness inwards the shares. But he adds that response is “overblown” because direction has a penchant for guiding inwards a conservative fashion.