2 Global Gaming Stocks You Might Be Overlooking
While much of Wall Street’s attention to the gambling business is payed to big-name casino operators like Las Vegas Sands Corp (NYSE: LVS) and MGM Resorts International (NYSE: MGM), the global gaming technology business offers investors another potential way to make a big bet on gaming.
This week, Union Gaming Research initiated coverage on two stocks in the gaming technology space.
Analyst Christopher Jones believes that the gaming technology industry will spend the next year or so digesting the recent wave of consolidation in the space. During this time, companies will be working to achieve merger synergies and improve operational efficiency.
Segments Of Stability
Although the overall global gaming industry has been unstable in recent months, Jones sees the lottery segment and the regional gaming business as pillars of strength within the industry.
According to Jones, the lottery business is the cornerstone of gaming technology, but cautions that it could be subject to near-term volatility due to currency turbulence and expiration of several key contracts in coming years.
When it comes to hardware, Jones sees an unprecedented level of competition. Replacement demand remains weak, and new opening demand is both volatile and well short of recent peak levels.
Despite the recent mergers, he believes that industry leaders International Game Technology PLC (NYSE: IGT) and Scientific Games Corp (NASDAQ: SGMS) will struggle to grow market share looking forward.
Despite the benefits of recent acquisitions Jones believes Scientific Games will continue to struggle with deleveraging. Union Gaming has a Hold rating on Scientific games and prefers Buy-rated International Game Technology, which is on track to achieve $230 million in merger synergies through 2016.
Latest Ratings for IGT
|Sep 2016||Argus Research||Initiates Coverage on||Buy|
|Sep 2016||Bank of America||Maintains||Buy|
|Aug 2015||Goldman Sachs||Initiates Coverage on||Sell|
© 2016 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.