Citi raises Light & Wonder stock rating, ups target to $200

On Wednesday, Light & Wonder stock received an optimistic update from Citi, with analyst Adrian Lemme upgrading the company’s stock rating from Neutral to Buy. Accompanying this upgrade was a significant increase in the price target, which was raised to AUD200.00 from the previous target of AUD156.00.

The upgrade was primarily attributed to Light & Wonder’s recent acquisition of Grover Charitable Gaming, which Citi believes will give the company access to a new high-growth vertical. The analyst noted that the potential for expansion into new states, ongoing state legalizations, and the rollout of their premium content portfolio are all factors supporting a strong outlook for the company.

Lemme’s analysis led to an increase in the estimated earnings before interest and taxes (EBIT) for Light & Wonder, with forecasts for fiscal year 2025 and 2026 being adjusted upwards by approximately 7% and 17%, respectively. These revised forecasts take into account not only the acquisition but also slightly higher projections for the base business.

In his comments, Lemme expressed confidence in the company’s earnings momentum, which underpinned the decision to upgrade the stock rating to Buy and raise the price target. "With earnings momentum improving, we upgrade our rating to Buy and increase our target price to $200.00," stated Lemme regarding the revised outlook for Light & Wonder.

Investors and market watchers will likely monitor Light & Wonder’s performance closely, especially in light of the company’s strategic moves and the positive expectations set forth by Citi’s latest analysis.

In other recent news, Light & Wonder has reported a series of notable developments. The company has secured a $1 billion revolving credit facility, replacing its previous $750 million line, to enhance its financial flexibility. The terms of this amendment, facilitated by JPMorgan Chase (NYSE:JPM) Bank, extend the maturity of the revolving commitments to February 2030. In addition, Light & Wonder announced the acquisition of Grover Gaming, which Benchmark analysts believe will strengthen its position in the charitable gaming market. This acquisition is expected to create revenue synergies and align with the company’s long-term growth objectives.

Furthermore, Light & Wonder has achieved a legal victory as a federal judge dismissed a patent infringement lawsuit filed by Evolution, declaring the patents invalid. This ruling alleviates some legal uncertainties for the company. In a strategic leadership move, Nathan Drane has been appointed as the Chief Product Officer, overseeing all game creation across the enterprise. Drane’s promotion is part of Light & Wonder’s efforts to unify its game development process.

Additionally, Light & Wonder fulfilled a regulatory disclosure to the Australian Securities Exchange, demonstrating its commitment to compliance and transparency. These recent developments collectively highlight Light & Wonder’s strategic initiatives to bolster its market presence and financial performance.

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