PlayAGS Stock Shaping Up to Be 2023 Redemption Story
Having exuviate 25.63% of its time value this year, PlayAGS (NYSE:AGS) is followers other gaming twist manufacturers to the downside this year, and is ace of the to a greater extent egregious offenders in the group. That’s not preventing at to the lowest degree single analyst from waxing bullish on the moribund stock.
In a note of hand to clients today, B. James Whitcomb Riley psychoanalyst St. David Bain reiterated a “buy” rating on PlayAGS stock with a $14 cost target. That’s advantageously higher up today’s closure publish of $5.05. The shares are push down 22.43% since the starting line of the 4th quarter.
The psychoanalyst late met with PlayAGS management, noting he came outside confirming on the company’s new Spectra 43 cabinet and potential opportunity inwards Texas, among other factors.
AGS’ new Spectra 43 storage locker continues to execute nigh 2.8x house intermediate at an expanding keep down of locations. Its young high-denomination mettlesome launch, a unexampled production segment for AGS, is also outperforming. We trust AGS has multiple go-forward segments fills that could farther speed up marketplace portion gains o'er the next 12 to 18 months,” wrote Bain.
Casino visitation trends are strong crosswise the US, compelling operators to offer the expansion slot rising slope oscillation owing to the in high spirits margins offered past gaming machines. Specific to AGS, the keep company is adding market share and derives 70% of its sales from recurring revenue streams.
Texas Could Be Long-Term Lift for PlayAGS Stock
In June, the Supreme Margaret Court ruled that the Ysleta del Sur Pueblo federation of tribes canful proffer bingo games on its reserve close El Paso. There’s conjecture that could surface the door for that group and the Alabama-Coushatta federation of tribes to eventually clear traditional tribal gaming facilities in Texas.
While that’s a long way off, some Texas lawmakers favor gaming enlargement and analysts are tantalized past the impact a market as vast as Texas could experience on PlayAGS stock. The society has established relationships with tribal operators inwards the second-largest state.
“We believe the Texas customer testament foretell its expanding upon past 1H23E. AGS should foretell a long-term arrangement for additional, participation units for the casino expansion in the same clip frame. While the casino’s permanent expansion may non fill out until belatedly CY24E, we trust a temporary expansion with to a greater extent games could add up before then,” added Bain.
The analyst points come out that the added revenant earnings before interest, taxes, depreciation and amortization (EBITDA) stream inwards Texas could add together $3 to $5 PlayAGS’ part price.
PlayAGS Stock Cheap, Apollo Overhang Gone
Last month, PlayAGS announced that buck private equity unwaveringly Phoebus Apollo Global Management (NYSE:APO) is merchandising its 22% stake inward the gaming company. While that word sent the caudex tumbling, analysts eyeshot it as positively charged and remotion of an overhang that long hindered PlayAGS stock.
“With Phoebus Apollo no longer a shareholder, AGS can buoy append new jurisdictional licenses, including Missouri, Colorado, and Minnesota, representing ~60,000 units. We believe at that place feature been typical, short-term structural equity hurdling followers the mid-November secondary, but that a great deal of it has flow its course,” concluded Bain.
Additionally, PlayAGS is deep discounted relative to its equal group. As Bain noted, the carry trades at 38% deduction to 2022 and 2023 enterprise value/EBITDA estimates.
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