Analyst Sees PlayAGS Gaining Market Share In Slot Industry

PlayAGS

PlayAGS (NYSE: AGS) has recently announced fourth-quarter earnings and revenue figures that closely align with its previously disclosed guidance, showcasing a robust performance. Looking ahead, there’s considerable potential for the slot machine manufacturer to assertively capture market share amidst ongoing industry consolidation, as highlighted by Stifel analyst Jeffrey Stantial.

This strategic move positions PlayAGS for further growth, potentially boosting its stock value, which has already surged by 8.19% year-to-date, significantly outpacing major small-cap indexes. Notably, PlayAGS is currently trading at a discount relative to its peer group, presenting an appealing investment opportunity, especially as the company strengthens its financial standing.

Stantial points to the recent monumental $6.2 billion deal, where International Game Technology’s (NYSE: IGT) global gaming and PlayDigital units are set to merge with Everi (NYSE: EVRI), a direct competitor of PlayAGS. This development underscores the ripe environment for PlayAGS to expand its market presence and potentially gain a competitive edge.

Optimistic Forecast for PlayAGS

Stantial maintains a bullish outlook on PlayAGS, citing the company’s robust momentum in the slot machine segment as it progresses into 2024. He reaffirms a “buy” rating and sets a price target of $12, indicating a potential upside of 30.4% from the closing price on March 5.

Highlighting PlayAGS’s performance, Stantial notes, “Relative outperformance is particularly noteworthy given limited contribution from the recently launched Spectra UR49C (where qualitative commentary on initial performance was encouraging).” He further points out that average selling prices (ASPs) witnessed a year-over-year increase of +7%, outperforming peers in the industry, which reported ASPs ranging from -14% to +10%.

Additional Growth Catalysts for PlayAGS

Apart from its endeavors to significantly reduce leverage, PlayAGS stands to benefit from several other growth catalysts. These include its discounted multiples, robust visibility on electronic gaming machine shipments over multiple months, and efforts to expand its customer base.

Stantial elaborates, “AGS also continues to broaden customer reach (~180 customers sold-to during Q4, up from 150 in Q3), supplementing higher average order size (a function of greater content & hardware diversity).

In summary, with a solid strategic position amidst industry consolidation, coupled with favorable market dynamics and multiple growth drivers, PlayAGS appears poised for sustained success in the coming quarters.

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