Light & Wonder shares lift as analysts downplay Dragon Train risks
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The news: Shares in US gambling company Light & Wonder have bounced back from a two-day slump as analysts downplay a US court injunction restricting it from manufacturing and selling new Dragon Train poker machines.
The numbers: Shares in the company were up 3.1% to $138.73 after losing more than 16% of their value over the last two sessions.
The context: UBS analysts upgraded Light & Wonder to ‘buy’ from ‘neutral’ but trimmed their 12-month price target to $166 from $169, saying the potential valuation upside compensates for the risks.
“We've previously identified difficulty in beating the market's strong growth expectations — however after the 18% share price reaction to the Dragon Train injunction, we now think the valuation upside more than compensates for those risks,” they said in a note.
Macquarie analysts also retained their ‘outperform’ rating and price target of $169, citing an attractive valuation.
“LNW reaffirmed the USD1.4 billion ($2.05 billion) 2025 AEBITDA guidance despite the fact that Dragon Train is generating an estimated USD70 million AEBITDA annually. This suggests two things: 1) the business was tracking ahead of guidance, and/or 2) there are levers to manage operating costs and pull forward product launches,” the Macquarie analysts said in a note.
The sources: UBS Research, Macquarie Research
