Stock Analyst Gives IGT ‘Buy’ Rating Due To Promising Lottery Outlook

The promising lottery prospects of International Game Technology recently drew praise from a top stock analyst.

B Riley Securities analyst David Bain gave IGT a “Buy” rating with a $30-per-share price target.

As of Tuesday, the stock is trading at $21.69 per share.

Following announced plans to merge with Everi Holdings, IGT, to Bain, should be seen as a pure-play lottery company. He noted that among lottery-oriented firms, IGT is trading at roughly half the value. However, he doesn’t feel IGT needs to take a back seat to any of its peers.

Lottery growth improving year-to-year

Bain sees lottery as a consistent revenue source that isn’t going to take hits to its customer base over time.

Lottery sales were up 5% in 2023 to $109 billion. Prior to the pandemic, growth was averaging about 4% year-to-year.

For IGT, it had a 7% jump in revenue last year in its lottery division. That equated to $681 million, up over $40 million from the previous year. Lottery accounted for 59% of the company’s revenue.

Bain noted that 90% of IGT’s lottery revenue is recurring. The company has market-leading positions in the United States and Italy. It also ranks high for online lottery.

IGT saw its iLottery sales grow 40% in 2023. That was due to improved numbers in its existing markets, not creating business in new ones. It had 22% of iLottery sales in the US last year.

Still, the amount of states with online lotteries should continue to expand in the years ahead, which makes IGT’s stock appealing.

“Lottery is a large, steady-growing, and resilient industry with recession-proof characteristics,” IGT CEO Vince Sandusky said during the Q4 call. “Growth accelerated during the pandemic, and our 2023 results confirm that we are successfully maintaining these higher play levels with significantly improved margins.”

Everi deal allows IGT to focus on lottery

IGT’s focus on lottery comes through its new deal with Everi Holdings.

The company will merge its PlayDigitial (digital gaming) and Global Gaming (slot machine) businesses with Everi. It was part of a $6.2 billion deal that was announced late in February. The agreement is expected to be completed in late 2024 or early 2025.

IGT will become a “pure-play global lottery business.”

Because of the focus on lottery, Bain noted that there is no reason that IGT should be trading at a lower value than some of its peers in the industry.

By comparison, NeoGames SA is trading at $29 per unit right now.

Italian Lottery contract renewal looming for IGT

One of the potential issues on the radar for IGT’s lottery business comes with its deal in Italy.

IGT has had an exclusive contract with the Italian Lottery for its products since 2016 as part of a nine-year agreement. That comes up in 2025.

Bain addressed IGT not having its contract renewed with the Italian Lottery as of now as a concern. However, he doesn’t see IGT being replaced in the country, as it would require a complete overhaul of its system and could highly disrupt a revenue source for Italy.

He also didn’t anticipate competitors trying to make over-the-top offers to try and unseat IGT for the Italian Lottery.

IGT present in over 50 lotteries worldwide

IGT was founded in 1990. It is headquartered in London, but has multiple office locations in the United States, as well.

The company provides technology to more than 50 lotteries across the world, including 25 retail lotteries in the United States.

It has recently scored multiyear facilities management contract extensions in top US markets. That includes California and Virginia. IGT just went live with a new contract in Connecticut in the last year, too.

IGT also had 28 large Game Touch self-service terminals installed throughout Michigan and Ontario in 2023.

 

Photo by PlayiLottery

About the Author

Drew Ellis

Drew Ellis

Lead Writer
A member of Catena Media since 2020, Drew Ellis is the Lead Writer at PlayiLottery, where he handles coverage of the online and retail lottery industry in the US. He previously spearheaded news content at PlayMichigan, where he covered one of the most prominent online lottery industries in the US — among the many other aspects of Michigan's sprawling iGaming market. You can email him at [email protected].
Back To Top