On Wednesday, Everi Holdings Inc. (NYSE:EVRI) stock experienced a shift in ratings as Stifel adjusted its stance on the company from Buy to Hold, while also raising the price target to $14.25, up from the previous $11.00.
This rating change comes in the wake of the recently announced acquisition of Everi by Apollo Global Management (NYSE:APO) for $14.25 per share in cash, a deal made public on July 26, 2024.
In the wake of the acquisition announcement, the analyst at Stifel noted that Everi's valuation, when compared to some of its peers, may seem modest. However, the cash offer is considered to provide a timely and appealing return for most shareholders. The potential for a competing offer is deemed unlikely due to the specific challenges Everi faces in its Games segment and a limited number of potential buyers.
The analyst also indicated confidence in the acquisition process, mentioning that regulatory approval is not seen as a significant hurdle and that Apollo has obtained the necessary financing commitments.
While selling to Apollo—a buyer known for its value orientation and history of litigation—poses unique risks should Everi's fundamentals weaken before the deal's closure, the proposed valuation and Apollo's past interest in similar acquisitions suggest a strong intention to finalize the transaction.
Currently, there is approximately an 11% gross spread between Everi's market price and the offer price, which is viewed as an attractive risk-adjusted return. Nonetheless, Stifel suggests that there may be more enticing investment opportunities available within its coverage area, leading to the decision to downgrade Everi's stock to Hold.
In other recent news, Everi Holdings has been center stage due to a number of recent developments. The company has announced plans to merge with International Game Technology (NYSE:IGT)'s Global Gaming and Play Digital businesses, a process that is expected to be finalized between late 2024 and early 2025. This move is aimed at enhancing product offerings and expanding market presence.
In addition to the merger, the company's stock rating was adjusted by Raymond James from a 'Strong Buy' to a 'Market Perform' status, following the announcement that Apollo will acquire Everi Holdings for approximately $6.3 billion. Truist Securities also adjusted its outlook on Everi Holdings, reducing the price target to $10 from the previous $11, while maintaining a Hold rating on the stock.
Everi's first-quarter results showed a dip in its Games segment, but its Fintech cash access services grew. Adjusted EBITDA fell to $80.3 million from $92.5 million in the prior year's quarter. The company anticipates revenue growth and a return to growth in Fintech revenues in the second half of 2024. These are among the recent developments concerning Everi Holdings.
InvestingPro Insights
Everi Holdings Inc. (NYSE:EVRI) has been under the spotlight following the acquisition announcement by Apollo Global Management. With Stifel's recent rating adjustment and price target increase, investors are keenly observing Everi's performance metrics. According to InvestingPro data, Everi boasts a robust gross profit margin of 80.22% for the last twelve months as of Q1 2024. This impressive margin is a testament to the company's efficiency and aligns with one of the InvestingPro Tips highlighting Everi's impressive gross profit margins. Furthermore, the company's aggressive share buyback strategy, as mentioned in another InvestingPro Tip, indicates management's confidence in the company's value.
Investors should also note Everi's stock price volatility, which has been high, as reflected in the stock's significant return over the last week of 46.74% and the last month of 52.5%. While this could represent an opportunity for high-risk investors, it also suggests caution for those averse to such fluctuations. The company's P/E ratio stands at 18.26, and it has adjusted to 15.29 for the last twelve months as of Q1 2024, which may offer insights into its current valuation relative to earnings.
For those considering an investment in Everi or seeking to deepen their analysis, there are additional InvestingPro Tips available, which can be accessed by visiting: https://www.investing.com/pro/EVRI. For a more comprehensive experience, use the coupon code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription, unlocking a wealth of investment insights and data.
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