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2 Global Gaming Stocks You Might Be Overlooking

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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.

Industry Outlook

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.

Hardware Competition

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.

Outlook

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

DateFirmActionFromTo
Feb 2018JefferiesInitiates Coverage OnBuy
Nov 2017Argus ResearchUpgradesHoldBuy
Nov 2017Bank of AmericaMaintainsBuy

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