Light & Wonder Inc (ASX: LNW) shares had a tough week.
Investors were selling the ASX 200 tech stock following the release of a quarterly update that fell short of the expectations.
This led to the poker machine developer's shares ending the week at $146.58, which is 13% below its 52-week high.
Should you buy this ASX 200 tech stock?
A number of brokers think that now could be the time to pounce on the stock following recent weakness. One of those is Morgans, which remains positive despite the soft quarterly update. In response to the update, the broker said:
Light & Wonder missed consensus earnings expectations in 3Q24, despite delivering its ninth straight quarter of double-digit consolidated revenue growth. Revenue increased 12% yoy to US$817m, in line with MorgansF but 2.3% below consensus. This was driven by continued strength in land-based gaming, which grew 15% yoy, with global machine sales up 38% (MorgansF 26%).
Adjusted EBITDA rose 12% to US$319m, falling 2% short of market expectations. LNW reaffirmed its US$1.4bn Adjusted EBITDA target for 2025. While there was no update on the status of Dragon Train, we find the new FY25 NPATA guidance and earnings growth outlook encouraging, reinforcing our Add rating.
Morgans has retained its add rating and $180.00 price target on the ASX 200 tech stock. This implies potential upside of 23% for investors over the next 12 months.
Who else is bullish?
Another broker that remains bullish on Light & Wonder is Goldman Sachs. It also acknowledges that the ASX 200 tech stock's quarterly update was softer than expected, but remains positive on the future. It said:
LNW: A softer quarter, however management remains upbeat on its growth trajectory and provided NPATA guidance of US$565-US$635mn for FY25 (midpoint +3% vs. GSe). Key positives: (1) Outperformance in NA Outright sales as shipments increased +31% to 6,094, driven by expansion into new adjacent markets, with this trend expected to continue into FY25; and (2) Share gains in ANZ (supported by ALL commentary) resulting in top ship share with a solid pipeline excl. Dragon Train (DT) to support further momentum (i.e. Shenlong Unleashed). […] We revise LNW FY25-FY27E AEBITDA -1% to -2% and EPSA -2% to -3%.
In light of this, the broker has reaffirmed its buy rating on Light & Wonder's shares with a trimmed price target of $171.90. This suggests that upside of over 17% is possible for investors over the next 12 months.
