PlayAGS Inventory Has the Potential to Double, Claims B. Riley Analyst

Posted on: June 12, 2021, 05:05h. 

Very last up-to-date on: June 12, 2021, 05:44h.

Quietly, PlayAGS (NYSE:AGS) inventory is one particular of this year’s finest-executing gaming equities, and just one analyst is wagering there is significantly additional upside to be had.

PlayAGS Stock
PlayAGS headquarters in Las Vegas. An analyst thinks the inventory can double. (Graphic: Las Vegas Overview-Journal)

In a the latest be aware to consumers, B. Riley analyst David Bain initiated protection of the casino technological know-how and games company with a “buy” rating and a $21 price goal. That indicates the shares can nearly double from the June 11 close at $10.80. The analyst sees an array of catalysts probably driving shares of the Las Vegas-centered organization greater.

We expect AGS’s product or service roadmap to substantively penetrate the $1.5 billion premium casino game phase, at this time AGS’s whitespace,” reported Bain. “Further, AGS’s significant-margin, recurring revenue desk organization is underfollowed and undervalued, specifically given its 2H21 desk shuffler enlargement, in our look at.”

The analyst’s bullish see on PlayAGS arrives at a time when some gaming equities are dithering. But that’s significantly from the circumstance for the maker of electronic gaming equipment and table video games, among the other solutions. Served by a get of 29.65 p.c over the previous month, PlayAGS is up 50 % year-to-date.

PlayAGS Inventory Effective Gaming Plan

With a current market capitalization of just below $418 million, PlayAGS is 1 of the smallest publicly traded gaming names in the US. That affirms its hidden gem position, but it does not diminish its prospective potency for buyers.

PlayAGS inventory is very levered to power in regional casinos since 80 p.c of its recurring income arrives from individuals venues. The firm has virtually 24,000 gaming participation models, which are identified in casinos in regional marketplaces and those people intensely frequented by locals. That tethers the shares to themes these as pent-up desire, mounting charges of COVID-19 vaccination, and older gamblers returning to their favourite regional gaming venues. In fact, some metrics for the enterprise are currently pacing forward of pre-pandemic stages.

1Q21 domestic participation for each device get exceeded pre-pandemic/1Q19 ranges, and checks cite continued gain strength,” stated Bain. “Improved functionality is pushed by potent host markets, pruning of reduce-executing areas/models, improved written content offerings, and a new, greater blend of quality recurring profits game installations, in our watch.”

PlayAGS: Catalyst-Abundant Tale

Even with the not long ago stellar general performance of PlayAGS, the gaming name has ample tailwinds, which includes a very long runway with which to mature marketplace share in the top quality online games phase.

AGS’s quality match current market penetration is perfectly under a single per cent, leaving enough whitespace. AGS only just lately began a substantive press into the top quality section, raising its foundation of quality units via the pandemic,” claimed Bain.

If the enterprise could generate its quality game titles share to three %, that would be really worth $10 a share, which isn’t accounted for in B. Riley’s rate goal, according to the analyst.

Incorporating to the PlayAGS scenario is that even with the stock’s modern surge, it’s continue to low-cost, buying and selling at 5.9x estimated 2023 organization worth/earnings right before desire, taxes, depreciation and amortization (EBITDA) as opposed to 9.1x for rivals. If the name rerates to its peer group, it could trade up to $24, adds Bain.