There are a lot of stocks to choose from on the S&P/ASX 200 index (ASX: XJO), but one of the best could be in this article.
That's because the team at Bell Potter believes it could offer outsized returns over the next 12 months.
Image source: Getty Images
Which ASX 200 stock?
The stock in question is gaming technology company Light & Wonder Inc (ASX: LNW).
Bell Potter highlights that the ASX 200 stock has released its results this week. And while its revenue growth was a touch softer than expected, its EBITDA beat expectations thanks to strong Gaming margins. It commented:
LNW reported +2% YoY revenue growth to $828m 3% below BPe of $852m and consensus of $847m, supported by +8% YoY growth in Gaming (-3% below BPe), -9% YoY decline in SciPlay (-7% vs. BPe) and +14% YoY growth in iGaming (+3% vs. BPe). Adj. EBITDA was $383m (+4% beat vs. BPe). Adj. NPATA of $156m was up +16% YoY (+11% beat vs. BPe). Nth. Am.
The EBITDA beat to consensus was driven by strong Gaming margins reflecting mix shift towards Grover. Game Sales ASP and SciPlay were the drivers of the weaker than expected top line result. Restructuring costs of $6m compares to $17m in pcp, pleasing, given this line item has been consistently elevated in prior quarters.
One disappointment was its guidance, which was weaker than expected. It said:
2026 AEBITDA target of mid-to-high single digits was reiterated in mid-July 2026. Additional Gaming guidance was provided for 3Q26/2H26: Global gaming sales of 8.5-9.0k in 3Q26 (BPe 10.7k); FPD growth trending in line with CPI in 2H26 (BPe +8% YoY). Overall, these are weaker than we expected.
Big potential returns
According to the note, in response to the update, the broker has retained its buy rating on the ASX 200 stock with a trimmed price target of $183.00 (from $190.00).
Based on its current share price of $118.00, this implies potential upside of 55% for investors over the next 12 months.
To put that into context, a $10,000 investment would turn into over $15,000 if Bell Potter is on the money with its recommendation.
Commenting on its buy thesis, it said:
We retain Buy and reduce TP. We now forecast EBITDA growth of at the lower end of the company's guidance range. We see a resumption in top line growth occurring in 4Q26. We believe LNW offers compelling value at 10x EV/EBIT(A) given growth metrics.
