Brokerage B. Riley Securities Inc says the impact on Light & Wonder Inc (L&W) of business disruption associated with the firm’s “Dragon Train” slot product will be “likely short-lived”.
The brokerage said it was reducing by “under 1 percent” its estimate for Light & Wonder’s full-year 2024 earnings before interest, taxation, depreciation and amortisation (EBITDA), to account for what it called “fourth quarter 2024 Dragon Train disruption”.
The institution’s analyst David Bain added however it was raising its forecast for Light & Wonder’s calendar-year 2025 by under 1 percent, based on the technology group’s “significant game lineup expansion/depth”.
The brokerage issued its update after recent talks with Light & Wonder management including chief financial officer Oliver Chow, coinciding with last week’s Global Gaming Expo (G2E) 2024 in Las Vegas, Nevada in the United States.
B. Riley Securities said the gaming equipment and digital content provider was likely to see “some international sales disruption in the fourth quarter and the first quarter 2025, as well as gaming operations disruption” in the final three months this year, due to Dragon Train-related “disruption”.
Slot machine specialist Aristocrat Technologies Inc stated in a September 23 announcement it had been granted a preliminary injunction by a Nevada court against Light & Wonder, after alleging the latter’s Dragon Train slot product infringed Aristocrat’s intellectual property.
Aristocrat had filed a lawsuit in March against Light & Wonder involving Dragon-themed titles offered by the two companies.
Light & Wonder’s president and chief executive, Matt Wilson, said recently that the company had plans to “build out” a new version of “Dragon Train”.
In a note last week, Mr Bain stated that court-related damages and other legal remedies relating to the Dragon Train matter could cost Light & Wonder somewhere in the range of “US$50 million to US$150 million”.
In his latest roundup note, from G2E-related meetings with managements of covered gaming names, Mr Bain observed of Light & Wonder: “Our meeting and subsequent product review increased our conviction that Light & Wonder’s stock is likely overcompensating for the recent Dragon Train disruption, and Light & Wonder is likely active with its share repurchase programme at current levels.”
He added: “Management indicated that customer response to Dragon Train game replacements continues to be benign.”
