Wall Street expects this gaming company will increase its annual earnings by 30.18% over the next five years.
International Game Technology PLC (IGT)
From Argus Weekly Staff Report
Following the sale of its Italian gaming business, International Game Technology will focus on its core business-to-business division and right-size its operations. Because the sale will eliminate high Italian taxes and reduce regulatory burdens, we expect IGT’s margins to improve.
Reflecting earnings beats in five of the past seven quarters (occasionally by triple digits), as well as EPS estimates that have been moving higher over the past 30 days, we are raising our 2021 EPS estimate to $1.00 from $0.95. For 2022, based on our expectations for continued above-consensus results, we are setting an EPS estimate of $1.32. Our long-term earnings growth rate forecast is 7%.
IGT shares are trading near their 52-week high and at an EV/EBITDA multiple of 9.8, above the average multiple of 8.0 prior to the 2015 merger with GTECH S.p.A. However, we believe that the current valuation inadequately reflects the company’s prospects for above-consensus results, as we expect recurring lottery revenue and growth in the gaming business to result in strong revenue and earnings over time. We are maintaining our BUY rating. Our long-term rating remains BUY. Our revised target price of $23, if achieved, offers investors the prospect of a 16% return.
Jim Kelleher, CFA, Argus Weekly Staff Report, argusresearch.com, 212-425-7500, March 18, 2021