The Light & Wonder Inc (ASX: LNW) share price is trading in the green on Friday afternoon. At the time of writing the shares are 0.31% higher at $125.24 a piece.
Over the past month the shares have dropped 0.28% and over the year they're 17.92% lower.
Today's increase follows a strong day of trading on Thursday after investors responded positively to the company's quarterly update. The gaming technology company reported third quarter net income jumping 78%, and a 3% increase in consolidated revenue.
This morning, following Light & Wonder's results announcement, analysts at Macquarie Group Ltd (ASX: MQG) released a note detailing their expectations on the stock.
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Light & Wonder shares set to surge
The broker has retained its outperform rating on Light & Wonder shares. It has also lowered its target price to $170, down from $180.
At the time of writing this represents a potential upside of 35.7% over the next 12 months.
"Earnings changes: We trim operational forecasts modestly (<2% at EBITDA), but raise EPSA +0% / +9% / +7% in 2025-28," the broker said in its note.
Valuation: TP = A$170/sh (from A$180/sh); based on a blend of 8.4x FY26E aEBITDA, 12x FY25-27E FCF, 24x FY25-27E EPS and 0.65 AUD/USD.
Near-term, the ASX primary listing and litigation are overwhelming investor interest. When these issues clear in the next 6-12 months, we see scope for a re-rating. Retain Outperform rating on LNW AU and cease LNW US coverage given delisting – US recommendation/TP should no longer be relied upon.
What else did Macquarie have to say?
The broker noted that Light & Wonder reported US$375m 3Q25 EBITDA including Grover. This was up 18% year-on-year, and 4% above both Macquarie and market expectations.
Revenue mix and cost management supported margin expansions across the businesses, albeit, are likely to either stabilise or moderate into 4Q25.
Reiteration of US$1.43 – 1.47bn 2025 aEBITDA guidance (MQe = US $1.43bn), is supported by the 3Q25 beat, run-rates within Gaming Ops and one-off European 4Q25 sales, and is despite around a six-month delay in Philippines outright sales (now 2Q26).
Overall, Macquarie expects margins will moderate sequentially impacted by revenue mix and tariffs. Through to 2028, the broker forecasts a 9% increase in aEBITDA three-year CAGR.
"Fundamentally, Light & Wonder is well-placed with a robust backdrop (report link) and market share momentum. Near-term the ASX primary listing and Aristocrat ligation are key investor concerns, and both should clear within 6-12 months. Leverage will ease with earnings growth and improving cashflow, but this will take time," the broker said in its note.
