On Wednesday, Stifel, a financial services company, revised its price target for shares of International Game Technology (NYSE:IGT), a global gaming company. The price target has been reduced to $26.00 from the previous $30.00 while maintaining a Hold rating on the stock.
The adjustment follows International Game Technology's latest quarterly results, which showed a 2% beat on adjusted EBITDA. However, the company's stock experienced a decline during Wednesday's trading session. The dip in share value is attributed to several factors, including a slight decrease in Global Lottery estimates based on same-store sales growth and operating income margin guidance. Additionally, concerns were raised over expected upfront payments related to the Lotto contract process.
Another point of contention affecting investor sentiment is the confusion and frustration surrounding the tax structure proposed for the spin-off of IGT's Global Gaming and PlayDigital businesses. Stifel suggests that while there is a compelling long-term value proposition for International Game Technology as a standalone lottery business, the stock may face short-term volatility.
The firm anticipates the shares to remain within a certain range leading up to the completion of the spin-off deal, largely due to apprehensions about tax implications and uncertainties in the Lotto renewal process.
In response to these considerations, Stifel has revised its model, lowering the forecasted adjusted EBITDA for fiscal years 2024 and 2025 by 4% and 5% respectively. The firm reiterates its Hold rating, signaling a neutral stance on the stock's near-term prospects, while acknowledging the potential for patient investors to benefit from the company's long-term outlook as a standalone entity.
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