Light & Wonder Inc (ASX: LNW) shares have been out of favour recently, retracing sharply from levels higher than $180 in January to just $123.94 now.
The analysts at Macquarie have taken a look at the gaming company's business and believe there's some serious share price upside to be had. We'll get to what their exact price target on the shares is later.
But firstly, why the cause for optimism?
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Profit to grow
Macquarie is predicting calendar-year net profit of US$638 million for Light & Wonder, with the broader broker consensus estimate at US$640 million.
This compares with the company's CY25 full-year result of US$567 million, which was itself an 18% rise from the previous year, on revenues of US$ 3,314 million, up 4%.
Light & Wonder Chief Executive Officer Matt Wilson said regarding the 2025 result:
We closed out 2025 with another strong quarter, delivering double-digit year-over-year growth in both revenue and cash flows. We also achieved several important milestones, including the successful acquisition and integration of Grover, accelerating our expansion in the Charitable Gaming market, and our transition to a sole primary listing on the ASX. We also continued to invest in our studios, which is paying dividends as our franchises drive strong game performance across the portfolio. Gaming momentum remained robust, with more than 700 North American Gaming operations units(6) added sequentially and over 12,300 units shipped globally during the quarter, while iGaming delivered another quarterly revenue and AEBITDA records. Looking ahead, we will remain focused on investing in product innovation and talent to strengthen our recurring revenue model(5), build on this momentum, and enhance our global competitive position as we progress toward our 2028 financial targets.
Shares looking cheap
The Macquarie team said they expected Light & Wonder to deliver improved quarter-to-quarter earnings growth in 2026, giving overall earnings growth a skew towards the second half of the year.
They added:
Revenues have 2H drivers, and with costs, there are some one-offs within 1H including legal and Grover's Indiana entry, whilst tariff impacts will annualise in 3Q26. Importantly, the backdrop is mostly robust with US casino revenue trends and North America iGaming showing growth, but with Social Casino there are headwinds, meaning that SciPlay needs to win market share to grow.
Macquarie said Light & Wonder was Macquarie's top pick in the Australian gaming sector, as it was well-positioned to win market share and had a "wide moat from disruption''.
Macquarie has a price target of $205 on Light & Wonder shares, compared with the current share price of $123.94. If achieved, this would represent a return of 65.4%.
Light & Wonder was valued at $10 billion at the close of trade on Thursday.
