Currently, PlayAGS (AGS) is known as a leading gaming supplier across the globe. The company offers high-performing Class II and Class III slot games, as well as game cabinets and table products. AGS is also renowned for its leading technology, the quality of its games and the engaging experiences they offer.
Last week, the leading financial advisory services provider and middle market investment bank, B Riley Securities, resumed its coverage for AGS. Coinciding with the resumption of coverage, the company confirmed a “Buy” credit rating along with a $16 price target per share for AGS.
Upon announcing the credit rating and price per share, the shares of AGS were trading at approximately $8.76 per share. David Bain, an expert analyst for B Riley Securities spoke about AGS, revealing that the company is seen as a leading gaming supplier that has a wide range of growth capabilities. Comparing AGS to other casino game manufacturers, he estimated that the company’s shares trade at approximately a 40% discount.
“We view PlayAGS (AGS) as an uncomplicated gaming supplier story with multiple visible upside levers to consensus estimates and its stock valuation.“
David Bain, analyst for B Riley Securities
New Growth Opportunities
Additionally, the analyst revealed that currently, AGS trades approximately 28% below its average one-year forward EV/EBITDA multiple. He said that this comes although AGS continues to gain positive momentum with increased market share as well as visibility. What’s more, Bain spoke about the impact of the transformative merger announced between Everi and International Game Technology (IGT). The recently announced business combination is expected to divest IGT from its Global Gaming and PlayDigital businesses and merge those assets with Everi, creating a new fintech and gaming enterprise valued at approximately $6.2 billion.
“Further, the merger leaves AGS as one of the last small pure-play gaming suppliers. It is now a scarce asset, leaving a higher likelihood for takeout speculation, in our view. It also potentially becomes more important to slot managers contemplating floor diversity,“
added Bain
According to Bain, the planned merger may have a positive impact on AGS. This is because, similar to other major combinations, the company along with similar experts in the sector may “look to fill any air pockets.” This is the result of product overlap and may create new opportunities before and after the merger. The process itself is not uncommon for the vertical.
At the same time, the analyst said that the merger may help AGS take a stronger position as it may become more attractive for gambling operators looking to diversify their offering.