Light & Wonder Inc (ASX: LNW) is one of Australia's largest consumer discretionary shares.
It is a leading global cross platform games company that operates three cohesive segments in the gaming sector.
It has been in focus this week after the company released quarterly results.
The company's net income came in at US$52 million, down 37% on the first quarter the previous year.
Net income fell 37% to US$52 million, while diluted net income per share declined 30% to US$0.66.
Management attributed the decline largely to approximately US$50 million in legal reserve contingencies associated with legacy legal matters.
Light and Wonder shares have experienced some volatility since reporting, and ultimately are down 29% from the start of the year.
Here is the latest guidance from Morgans following last week's results.
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Softer than expected
Morgans said Light & Wonder delivered a softer than expected 1Q26 result missing Morgans and consensus on revenue and AEBITDA in what is seasonally the group's weakest quarter.
The North American Gaming operations installed base was the standout negative surprise – ex-Grover net installs of -420 units, driven by the earlier than anticipated Resorts World New York VLT to Class III conversion – compounded by weak international machine sales and ongoing SciPlay softness. Grover delivered a strong 660 sequential net adds on Indiana market entry, and AEBITDA margins expanded across every segment.
Buy rating retained
Based on this guidance, Morgans has retained its buy recommendation, but lowered its 12-month target price to $168 (previously A$183) on Light and Wonder shares.
The market's 8% sell-off reflects legitimate frustration, though at ~10x forward PER and an FY26-28F EPSA CAGR of 17%, we view the dislocation as an opportunity.
From yesterday's closing price of $110.30, this indicates an upside potential of 52%.
Other brokers weigh in
Light & Wonder shares are drawing attention from other brokers too.
It seems sentiment around the market suggests Light & Wonder shares could now be significantly undervalued.
Following its results, both UBS and Macquarie updated their guidance on the gaming stock.
Macquarie's price target on the stock is $200, while UBS has a price target of $210 on Light & Wonder shares.
The broker said they were confident the company could deliver 5% to 9% EBITDA growth this year.
Elsewhere, Bell Potter have retained their buy rating on this gaming technology company's shares with a reduced price target of $190.00.
These estimates between $190 and $210 indicate upside potential of between 72% and 90%.
