Light & Wonder Inc (ASX: LNW) shares fell 7.46% yesterday in what was largely a positive day of trading for the S&P/ASX 200 Index (ASX: XJO).
Australia's benchmark index crawled 0.32% higher on Thursday.
However investors were jumping ship from Light & Wonder shares despite no price sensitive news out of the company.
Light & Wonder is a global gaming and entertainment company that develops and distributes gaming machines, gaming content, and digital gaming platforms.
Its products and services include electronic gaming machines sold to casinos and clubs, digital games, and casual/social gaming through its SciPlay division.
So is yesterday's sharp sell-off an opportunity for investors to buy the dip?
Let's find out.
Image source: Getty Images
Litigation in the rear view mirror
Light & Wonder shares were on a steady decline through most of 2025.
This was in line with much of the consumer discretionary sector.
However the share price started climbing late in the year and flew 40% higher throughout November and December.
Light & Wonder shares then spiked again following the announcement from Aristocrat Leisure Ltd (ASX: ALL), that the two gaming companies had agreed to settle an ongoing legal dispute.
For context, Aristocrat took legal action after alleging that Light & Wonder used its trade secrets and copyrighted materials to develop two games.
Light & Wonder agreed to compensate Aristocrat US$127.5 million (approximately AU$190 million) for misappropriation and infringement of its intellectual property.
Investors gobbled up Light & Wonder shares following this announcement, seemingly optimistic with the legal troubles settled.
This included a rise of 17% in one day of trading alone.
Where to now?
More recently, the stock price has been on a steady decline.
Including yesterday's 7% fall, the share price has dropped more than 16% in the last month.
The core business still looks rock solid, generating consistent revenue through its Gaming, SciPlay, and iGaming segments.
Light & Wonder is set to report fourth quarter and full year 2025 results on Tuesday, 24 February.
It's unlikely this will generate a sharp rally.
Consensus seems to point towards upside through steady execution rather than any surprising news.
Strong upside
Based on recent guidance out of brokers, it seems now could be a buying opportunity for Light & Wonder shares.
It she price closed yesterday at $151.95.
Analysts at Morgan Stanley have an overweight rating and $220.00 price target due to the company's growth prospects in the medium term.
This target indicates a potential upside of 44.79%.
Elsewhere, TradingView has an average 1 year price target of $194.89, which indicates 28% upside.
