Jefferies Increases Bet On PlayAGS

PlayAGS, Inc. AGS's expansion of casino and gaming products was reflected in the company's second-quarter report, according to Jefferies. 

The Analyst 

Jefferies analyst David Katz upgraded PlayAGS from Hold to Buy and increased the price target from $26 to $28.95.

The Thesis

Jefferies' upgrade was driven by the company’s strong product momentum, a continued beat-and-raise cycle and balanced growth in products — trends Katz said he expects to continue into 2020. (See the analyst's track record here.) 

“As a result, we are raising our estimates above consensus for all forecast periods. We view the growth opportunities in the context of continued product momentum, the untapped market opportunities and positive inflection points in the model."

Katz anticipates the Orion Slant to be an important catalyst given the success of Orion Portrait, which accounted for 60 percent of sales in the second quarter.

Other growth drivers include the B2B sports betting business and the table games business, which has grown over 60 percent since 2015, the analyst said.

“The B2B sports betting business will provide content aggregation to sports book operators and represents the company's entrance into the rapidly growing sports betting market,” he said. 

Both PlayAGS' existing content and yet-to-be-released content should generate 10-percent EBITDA growth, according to Jefferies. 

Price Action:

PlayAGS shares were up 0.66 percent at $29.62 at the time of publication Friday.

Related Links:

PlayAGS Has The Blueprint For Success, Deutsche Bank Says In Bullish Initiation

Casino Stocks A Good Gamble After Recent Underperformance

Photo courtesy of PlayAGS.