Light & Wonder Inc (ASX: LNW) shares were on form on Thursday,
The ASX 200 stock finished the day 8% higher after investors responded positively to its quarterly update.
The good news is that this could be the start of even greater gains according to one leading broker.
Let's see what it is saying about the gaming technology company following its update.
What is the broker saying?
Bell Potter notes that the ASX 200 stock outperformed expectations during the third quarter of FY 2025, with earnings coming in ahead of consensus estimates and its own forecasts thanks to margin expansion. It said:
LNW reported Adj. EBITDA 4% above both BPe and VA consensus, respectively. Profit & loss: LNW reported +3% YoY revenue growth to US$841m above BPe of US$839m and below consensus of US$850m, supported by +4% YoY growth in Gaming (BPe +2%), -4% YoY decline in SciPlay (BPe +2%) and +16% YoY growth in iGaming (BPe +14%). Adj. EBITDA was US$375m up 18% YoY. Adj. NPATA of US$153m was up +25% YoY (+14/+10% beat vs. BPe/VA). The Nth. Am. install base grew by 0.87k units (incl. Grover) to 47.24k, behind BPe and consensus expectations. The beat to consensus was driven by margin expansion in Gaming and iGaming.
It was also pleased to see management reaffirm its full year earnings guidance ahead of the seasonally strong fourth quarter. It adds:
The company has reaffirmed its FY25 AEBITDA guidance range of US$1,430-1,470m, implying a required growth rate of 25-38% in 4Q25e. Q4 is seasonally the strongest quarter for LNW (historically generates 27% of full year EBITDA) and was impacted in 4Q24 by Dragon Train related costs.
ASX 200 stock tipped to rise strongly
According to the note, Bell Potter has reaffirmed its buy rating on Light & Wonder's shares with an improved price target of $176.00.
Based on its current share price of $124.85, this implies potential upside of 41% for investors over the next 12 months.
Bell Potter believes that the ASX 200 stock is a great example of growth at a reasonable price (GARP). It explains:
We rate LNW a Buy over the medium to long term due to a compelling GARP profile relative to the ASX 100 and ALL (38% discount to EV / EBITA, pre 3Q25 upgrades). In our view, the key catalyst in closing this discount is the ASX sole listing, which we believe will weigh positively on the stock after November 2025. In the short term we acknowledge risks to LNW including: a worsening in the ALL litigation matter (less likely, in our view); and market disruption due to the Nasdaq delisting.
