Were International Game Technology Plc (IGT) to split its global gaming and digital content units from its lottery business, the first two could potentially be packaged and listed “in either the United States or Australia,” according to a Thursday note from David Bain, an analyst at B. Riley Securities Inc.
The brokerage was referring to an IGT announcement the same day, regarding a “review of strategic alternatives for its global gaming and PlayDigital” businesses in order to “enhance shareholder value”.
In November 2021, IGT had said it was considering a separate public listing of the group’s digital and betting business, as part of a strategic review for future growth.
“An ‘unpacked’ IGT should be worth considerably more than where it trades,” suggested analyst Mr Bain in his memo.
“Approximately 70 percent of IGT EBITDA [earnings before interest, taxation, depreciation and amortisation] is generated from the lottery” business, he said. In general, “lottery valuations are over circa 40 percent higher” than IGT’s own stock value, he added.
IGT’s stock price stood at US$31.50 at the close of trading on Thursday, up 3.9 percent on the day.
In comparison, the stock price of casino equipment and game technology provider Light & Wonder Inc was US$66.97 at the end of Thursday’s session.
A separate public listing of a gaming and digital entity “should also trade at an augmented valuation” versus IGT’s current stock price, said Mr Bain.
“IGT’s consensus gaming EBITDA growth far outpaces all peers, yet IGT trades 13 percent below the casino supplier peer average,” he stated.
Were an outright sale of the IGT group to be pursued, there would be a “relatively limited field of potential buyers”, noted the brokerage.
Nonetheless, the institution took the view that the “potential buyer pool is ‘global’ and extends beyond traditional gaming suppliers, including to digital pure-plays”.
Mr Bain wrote: “IGT’s mostly recurring, significantly established (iconic), growing gaming business offers a unique opportunity within the global gaming industry.”
