If you have a penchant for ASX growth stocks, like I do, then you may want to check out the one in this article.
That's because analysts at Goldman Sachs believe it is well-positioned for strong growth and see potential for market-beating returns from its shares.
Which ASX growth stock?
The company in question is Light & Wonder Inc (ASX: LNW).
Formerly known as Scientific Games, Light & Wonder is an American cross-platform global games company that provides gambling products and services.
It listed on the Australian share market just over a year ago. Since then, the ASX growth stock has raced over 70% higher.
However, despite this strong return, analysts at Goldman Sachs believes there's still plenty of room for its shares to rise further from current levels.
According to a note out of the investment bank this morning, the broker has reaffirmed its buy rating and $190.00 price target on the ASX growth stock.
Based on its current share price of $156.40, this implies potential upside of 21.5% for investors over the next 12 months.
Why is the broker bullish?
Goldman has revealed why it believes that Light & Wonder shares would be a great option for investors.
Its bullish view its based largely on its belief that the company can reach its FY 2025 AEBITDA target of US$1.4 billion, which is ahead of consensus estimates. It named three reasons why:
We believe this will be driven by: 1. Share gains in North America gaming operations (GSe c.16% now to >20% over the mid-term) with strong ANZ performance a lead indicator. LNW is also increasing their R&D spend which will drive the development of top-performing games. 2. SciPlay is out indexing the social casino segment through higher monetisation rates and modest user growth, despite broader industry headwinds. 3. Strong track record in iGaming where LNW's pedigree in land-based should continue to provide a key advantage in this large and growing market (GSe US$6bn, +14% CAGR).
Goldman also highlights that the company has a strong balance sheet, which it believes provides extra justification for a higher valuation for the ASX growth stock. It adds:
Additionally, LNW has a strong balance sheet now after a period of de-levering, and we think this is a key factor in justifying a valuation uplift with scope for capital management initiatives.
All in all, the broker appears to believe this could make Light & Wonder worth considering if you are looking for new additions to your growth portfolio.
