Light & Wonder shares extend losses as Q3 result underwhelms
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The news: US gambling company Light & Wonder was the worst performing ASX 200 company in morning trade, after its Q3 result underwhelmed investors.
The numbers: Light & Wonder shares fell by 4% to $145.55 by 12:10pm AEDT, having closed 4.6% lower on Wednesday.
Bell Potter and Macquarie both hiked their price targets on the stock due to foreign exchange movements as the Australian dollar has been trading weaker. Bell Potter's price target moved from $165 to $180, while Macquarie's lifted $11 to $180.
Jarden trimmed its target price from $174 to $173 due to lower forecasts. Goldman Sachs' target price edged up from $171.90 to $172.20, while Morningstar raised its fair value estimate by 2% to $164.
The context: Bell Potter, Jarden and Goldman Sachs reiterated their 'buy' recommendations on Light & Wonder, while Macquarie retained its 'overweight' rating.
Jarden analysts called the trading update "solid" but "slightly underwhelming", falling slightly below consensus forecasts.
Bell Potter analyst Baxter Kirk noted that the negative market reaction to Light & Wonder's Q3 result was likely driven by the company's Q4 guidance of low single-digits AEBITDA growth, implying 10% growth for 2024.
Macquarie analysts reduced their EBITDA forecasts for FY24 to FY26, noting that while recent Australia product launches are supportive for ongoing volumes, they are unlikely to meet previous levels.
Morningstar analyst Angus Hewitt said Light & Wonder's Q3 result was driven by its strong performance in outright gaming machine sales, with the company taking market share.
What they said: "Unlike leased machines, outright sales volumes are notoriously volatile," Hewitt said.
"While we lift our near-term forecasts slightly on the back of Light & Wonder's pipeline and momentum, our longer-term expectations remain broadly intact."
The sources: Jarden research, Macquarie research, Goldman Sachs research, Bell Potter research
