On Wednesday, Jefferies adjusted its outlook on International Game Technology (NYSE:), lowering its price target on the stock to $26.00 from the previous $30.00, while maintaining a Hold recommendation on the stock.
The adjustment followed IGT’s trading activity, which softened during Wednesday’s session despite reporting a 2% beat in fourth-quarter adjusted EBITDA. The price target reduction is due to several factors that could affect the company’s stock performance in the near future.
Analysts pointed to a slight downward trend in estimates for Global Lottery, as evidenced by same-store sales growth and operating profit margin guidance. There were also concerns about expected upfront payments associated with Lotto’s contract process.
Another contributing factor was continued investor confusion and frustration regarding the tax structure of the upcoming spin-off of IGT’s Global Gaming and PlayDigital divisions.
Jeffries noted that while IGT’s long-term prospects remain promising, particularly as a standalone lottery business that could potentially command a more appropriate valuation, current sentiment suggests the stock may not see a significant move until the spin-off deal is completed. Uncertainty around tax implications and Lotto’s renewal process could keep the stock in a trading range for a while.
Given these considerations, Jefferies also revised its financial model for IGT, lowering its forecast adjusted EBITDA by 4% for fiscal 2024 and 5% for fiscal 2025. This revision is in line with the company’s recently established price target of US$26 and reflects caution. position on shares in light of identified problems and uncertainties.
This article was created with the help of AI and reviewed by an editor. For more information please see our Terms and Conditions.