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On Wednesday, Mizuho (NYSE:MFG) Securities adjusted its financial outlook for Light & Wonder (NASDAQ:LNW), increasing the price target to $80 from the previous $76 while maintaining an Underperform rating on the company’s stock. The firm’s analysts provided insights following the release of Light & Wonder’s fourth-quarter financial results for the year 2024.
Light & Wonder reported fourth-quarter revenue that met market expectations, posting $797 million, closely aligned with Mizuho’s projection of $798 million and the consensus estimate of $797 million. The company’s Adjusted EBITDA for the quarter was slightly higher than anticipated, coming in at $315 million, compared to Mizuho’s estimate of $311 million and the Street’s forecast of $308.8 million.
The Gaming Operations (Gaming-Ops) segment of Light & Wonder’s business, however, did not perform as well as expected, generating $175 million in revenue against Mizuho’s prediction of $178 million. Despite this, the company anticipates growth in the Gaming-Ops segment, driven by a strong content pipeline and an increase in average yield in the North American market. This is expected to contribute to sequential momentum throughout the fiscal year 2025, following some setbacks in the fourth quarter due to the Dragon Train headwind.
Mizuho’s analysts noted that the modest outperformance in the quarter was bolstered by the Systems and Tables segments, which they believe could be attributable to timing factors between the third and fourth quarters. Additionally, improved margins from SciPlay (NASDAQ:SCPL), Light & Wonder’s social gaming platform, were seen as a positive aspect, although the Gaming Operations and Sales segments fell short of expectations.
Despite facing tough comparisons, management at Light & Wonder is optimistic about the Game Sales segment’s performance improving in the second half of the year. The firm’s operations are trending well, and the year 2025 is expected to bring about yield improvements, as indicated by the company’s management.
In other recent news, Light & Wonder reported strong fourth-quarter 2024 earnings, delivering an earnings per share (EPS) of $1.42, which exceeded analyst expectations of $0.94 by 51%. Although the company experienced a slight revenue shortfall, with $797 million compared to the anticipated $805 million, it still marked a 4% year-over-year increase. The company’s full-year consolidated revenue reached $3.2 billion, up 10% from the previous year, while operating income rose by 29% to $668 million. Light & Wonder’s EBITDA for 2024 was reported at $1.24 billion, reflecting an 11% increase from 2023. Macquarie analyst Chad Beynon raised the company’s stock price target to $125 and maintained an Outperform rating, noting the company’s fourth-quarter AEBITDA of $315 million surpassed consensus estimates. The company also accelerated its share repurchase program, buying back $243 million worth of shares. Analysts at Macquarie highlighted the expected growth in North American Gaming Operations and iGaming, as well as the impact of Grover Gaming’s inclusion in 2025. Light & Wonder’s strategic initiatives and product launches continue to drive growth, with a targeted EBITDA of $1.4 billion for 2025.
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