Light & Wonder shares fall despite Morningstar, Jarden upgrades
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The news: Light & Wonder shares edged lower on the ASX despite a positive response from analysts to the gambling company's June quarter results.
The numbers: Light & Wonder shares were down 2.9% to $155.27 having closed 2.23% on Thursday after the company reported a 14% rise in quarterly gaming revenue.
Morningstar raised its fair value estimate on the stock by 7% to $160 per share, and lifted its EBITDA forecasts in FY25 and FY26 by 3% and 2% respectively.
Jarden retained its 'buy' rating on Light & Wonder and hiked its 12-month target price from $167 to $176 per share. It also upgraded its adjusted EBITDA and earnings per share estimates by 3% and 1.5% respectively for FY24 through to FY26.
The context: Morningstar analyst Angus Hewitt said that Light & Wonder's better-than-expected result was driven by a strong performance in the core gaming market, which makes up the majority of Light & Wonder's earnings.
Hewitt noted that the US-based company has been boosted by the success of the new Dragon Train game, with Light & Wonder holding off ASX-rival Aristocrat to maintain its number one ship share in Australia during the quarter.
What they said: Jarden analysts said that Light & Wonder's quarter "not only validated the economic resilience of the gaming supplier industry (amid uncertain economic times) but highlighted strong execution of a more focused, content-led, growth strategy".
"The power of its ever-expanding portfolio (both breadth and depth of games and cabinets) should see gaming (and to a lesser degree, SciPlay) drive above category growth," they said.
The sources: Jarden research, Morningstar research
