PlayAGS Inventory Has the Opportunity to Double, Suggests B. Riley Analyst

Posted on: June 12, 2021, 05:05h. 

Final up-to-date on: June 12, 2021, 05:44h.

Quietly, PlayAGS (NYSE:AGS) stock is just one of this year’s most effective-doing gaming equities, and just one analyst is wagering there is a great deal far more upside to be experienced.

PlayAGS Stock
PlayAGS headquarters in Las Vegas. An analyst thinks the inventory can double. (Graphic: Las Vegas Critique-Journal)

In a current notice to clientele, B. Riley analyst David Bain initiated protection of the on line casino technological innovation and game titles provider with a “buy” rating and a $21 selling price concentrate on. That indicates the shares can just about double from the June 11 close at $10.80. The analyst sees an array of catalysts likely driving shares of the Las Vegas-dependent organization bigger.

We assume AGS’s merchandise roadmap to substantively penetrate the $1.5 billion quality casino match segment, presently AGS’s whitespace,” claimed Bain. “Further, AGS’s large-margin, recurring revenue desk enterprise is underfollowed and undervalued, particularly supplied its 2H21 table shuffler expansion, in our view.”

The analyst’s bullish watch on PlayAGS arrives at a time when some gaming equities are dithering. But that is considerably from the scenario for the maker of electronic gaming equipment and desk video games, amid other products. Assisted by a get of 29.65 percent around the previous month, PlayAGS is up 50 percent 12 months-to-date.

PlayAGS Inventory Strong Gaming Strategy

With a market place capitalization of just underneath $418 million, PlayAGS is a person of the smallest publicly traded gaming names in the US. That affirms its hidden gem position, but it doesn’t diminish its prospective efficiency for buyers.

PlayAGS inventory is remarkably levered to strength in regional casinos since 80 % of its recurring income will come from those venues. The firm has almost 24,000 gaming participation models, which are located in casinos in regional marketplaces and individuals greatly frequented by locals. That tethers the shares to themes these kinds of as pent-up demand, mounting rates of COVID-19 vaccination, and more mature gamblers returning to their most loved local gaming venues. In reality, some metrics for the business are currently pacing in advance of pre-pandemic amounts.

1Q21 domestic participation for every device get exceeded pre-pandemic/1Q19 stages, and checks cite ongoing gain energy,” mentioned Bain. “Improved general performance is pushed by strong host marketplaces, pruning of lessen-undertaking spots/models, improved material choices, and a new, increased blend of premium recurring income recreation installations, in our look at.”

PlayAGS: Catalyst-Loaded Story

Even with the a short while ago stellar general performance of PlayAGS, the gaming title has sufficient tailwinds, like a very long runway with which to increase marketplace share in the premium video games section.

AGS’s premium game market place penetration is properly under one percent, leaving enough whitespace. AGS only recently started a substantive drive into the premium phase, rising its base of quality models as a result of the pandemic,” explained Bain.

If the firm could generate its quality online games share to 3 p.c, that would be worthy of $10 a share, which is not accounted for in B. Riley’s selling price goal, in accordance to the analyst.

Introducing to the PlayAGS case is that even with the stock’s modern surge, it’s continue to low-cost, trading at 5.9x estimated 2023 organization benefit/earnings before curiosity, taxes, depreciation and amortization (EBITDA) in comparison to 9.1x for rivals. If the name rerates to its peer team, it could trade up to $24, provides Bain.