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Gaming supplier PlayAGS Inc (NYSE:AGS) offered its shares to the public in a Jan. 26 IPO.
The Analyst
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Following the IPO quiet period expiry, Deutsche Bank analyst Carlo Santarelli initiated coverage of PlayAGS with a Buy rating and $23 price target.
The Thesis
The 2018 PlayAGS story is similar to Multimedia Games Holding Company Inc (NASDAQ:MGAM) in 2010, with the similarities being vast ship-share potential, an early stage product cycle and several jurisdictional rollout opportunities, Santarelli said in a Tuesday note.
Santarelli outlined what he views as the favorable aspects of the PlayAGS story:
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- Significant white space opportunity in the North American EGM market.
- Strong game performance relative to house averages, driving incremental ship share.
- Strong hardware pipeline with a solid order backlog.
- International growth.
- The participation base, which could drive incremental operating leverage.
"In AGS, we see an upstart equipment supplier, with a steady cash flow generating install base, several growth avenues, both domestic and international, and multiple fundamental tailwinds, which should promote a multiyear double-digit EBITDA CAGR," Santarelli said.
Deutsche Bank's bullish stance is premised on a healthy opportunity set, a better balance sheet than peers and "dream the dream" potential, the analyst said.
The Price Action
PlayAGS stock closed its debut session at $18.50, up 15.6 percent from the offer price of $16. Since then, the stock has added 7.8 percent.
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Crypto Whales Are Loading Up — Are You?
New research shows the biggest crypto buyers are back. And this time? They could hold for the possibility that Bitcoin will surpass $100,000 in 2024. You don’t want to miss the next massive crypto bull run like we saw in 2020 and 2021. To know exactly what’s going on and what to buy… Get Access To Benzinga’s Best Crypto Research and Investments For Only $1.