IGT
International Game Technology
$23.77 +3.61 (+17.91%)
(As of 5:23 p.m. ET)
52 week range $18.90
▼
$33.99
Dividend yield: 3.37%
P/E ratio: 22.64
Target price $28.00
International Gaming Technology PLC NYSE: IGT provides electronic gambling, gaming and lottery products and services worldwide. It is famous for providing most of the slot machines in Las Vegas in the pre-pandemic era. In addition to its Global Gaming and Global Lottery divisions, the company has expanded to include digital gaming through its PlayDigital division. PlayDigital develops online and mobile casino games in established regulated markets. It also partners with established land-based casinos and online gaming operators to incorporate PlayDigital games into their platforms. In February, the company announced a complex agreement to separate its lottery and gaming divisions.
IGT operates in the consumer discretionary sector and competes with Light & Wonder Inc. (NASDAQ: LNW), Playtech PLC (OTCMKTS: PYTCY), and DraftKings Inc. (NASDAQ: DKNG).
Deciphering IGT and Everi’s division split
IGT announced the separation of its lottery and gaming divisions on February 29, 2024. Global Gaming and Play Digital, which include online casino, iGaming and sports betting products, will be separated from the lottery division. The two gaming divisions will merge with rival gaming technology company Every Holdings, Inc. (NYSE: EVRI) to form a new entity under the name and stock symbol International Gaming Technology in a $6.2 billion deal.
Existing IGT shareholders will own 54% of the combined gaming company, while Everi shareholders will hold the remaining 46%. The lottery business will change its name and receive a new stock symbol. The business will be separated through a taxable spin-off to IGT investors and merge with Everi. The transaction is expected to close by late 2024 or early 2025. The lottery division recently signed a seven-year agreement with the Colorado Lottery.
Purpose of spin-off merger
The objectives of this transaction are clear. Management feels that the market has undervalued the company’s intrinsic value for too long. They also want to clarify focus between the divisions so that the lottery business can focus on lotteries and the gaming division can focus on gaming. What is confusing about this transaction is that the new entity will continue to trade under the IGT stock symbol and retain the International Gaming Technology name, but will merge with Everi to create a stronger gaming company. The lottery division will also trade as a separate public company on the New York Stock Exchange under a new stock symbol and a new name.
IGT stock is in a descending triangle pattern
The daily candlestick chart of IGT is forming a descending triangle pattern. This pattern is formed when a descending upper trendline connects the lower high and the lower flat bottom trendline on the bounce, culminating at $19.80. As time passes, the trading channel between the upper and lower trendlines is narrowing, indicating a breakout through the upper trendline or through the lower trendline is imminent. The daily Relative Strength Index (RSI) has bounced back to the 59 band as bulls make another breakout attempt. Pullback support levels are $19.80, $18.90, $17.52, and $16.46.
Slowing growth
IGT reported first-quarter 2024 EPS of 46 cents, beating analysts’ consensus estimate by 15 cents. Revenue increased 1% year over year to $1.07 billion, beating the consensus estimate of $1.03. The strength was primarily driven by the lottery division, partially offset by sales of games and digital products. Operating income was $256 million, in line with the year-ago period. Operating margin was 24%, 400 basis points above estimate. Adjusted EBITDA margin was 41.5% on adjusted EBITDA of $443 million.
Full-year 2024 outlook revised upwards
Overall Market Rank™: 3.88 out of 5
Analyst Rating: Moderate Buy
Upward/Downward 19.0% Upward
Short selling health
Dividend Strength: Medium
Sustainability – 0.34
News Sentiment 0.65
Insider TradingN/A
Estimated earnings growth rate: 30.52%
Show details
IGT raised its full-year 2024 revenue guidance to $4.4 billion, above the consensus estimate of $4.36 billion, based on strong first-quarter 2024 performance. However, its second-quarter 2024 revenue guidance was weaker at $1.05 billion compared to the consensus estimate of $1.09 billion.
“Our innovative games, hardware and systems solutions drove better-than-expected performance for our Global Lottery and Games & Digital segments in the first quarter,” IGT CEO Vince Sadusky said in a statement.
Sadusky concluded, “As a result, we have increased our full year 2024 revenue and profit targets, reflecting broad-based momentum across our key performance indicators throughout the year. We are separating Global Lottery from Gaming & Digital and preparing the proposed transaction with Every.”
Analyst ratings and price targets for International Gaming Technology can be found on MarketBeat. The analyst consensus price target of $28.00 implies an upside of 24.3%. IGT has 6 analyst ratings, with 4 being “buys” and 2 being “holds.”
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