On Wednesday, Truist Securities adjusted its outlook on International Game Technology (NYSE:IGT) shares, reducing the price target from $26.00 to $23.00 while maintaining a Hold rating on the stock.
The change reflects a more conservative stance on the company's earnings before interest, taxes, depreciation, and amortization (EBITDA) for the year 2024, which the firm decreased by 1% due to cautious margin assumptions.
The firm's decision comes after IGT reported a high single-digit EBITDA beat, driven by a strong performance in the Lottery segment that helped to counterbalance a miss in the Gaming & Digital (G&D) division.
This was attributed to a shift in the timing of separation costs. Management responded to the earnings beat by raising its full-year outlook to the higher end of its previous guidance.
Further insights were provided on the ongoing developments regarding the renewal of the Italy lottery concession. Additionally, the anticipated combination between IGT and Everi Holdings Inc. (NYSE:NYSE:EVRI), which is expected to be completed between late 2024 and early 2025, was confirmed to be progressing as planned.
Despite the positive first-quarter results, Truist Securities noted that some investors might be concerned about the potential loss of diversification following the separation of IGT's businesses.
However, the firm also acknowledged that there could be long-term benefits from the deal. In the near term, the analyst suggested that the stock might experience limited price movement.
The revision in IGT's price target to $23 reflects these various factors as the company navigates through its strategic developments and market conditions.
InvestingPro Insights
As International Game Technology (IGT) navigates strategic changes and market conditions, current data from InvestingPro provides additional context for investors. With a market capitalization of $4.13 billion and a price-to-earnings ratio of 24.11, IGT presents a mixed financial picture. Notably, the company has shown resilience with a gross profit margin of nearly 49% over the last twelve months as of Q4 2023.
Two InvestingPro Tips highlight key aspects for potential investors. Firstly, IGT has demonstrated consistent shareholder commitment by maintaining dividend payments for 10 consecutive years, currently offering a dividend yield of 3.88%. Secondly, despite recent price volatility and trading near its 52-week low, analysts remain optimistic about sales growth in the current year and predict profitability for IGT.
For those looking to delve deeper into IGT's financials and future prospects, InvestingPro offers additional insights and tips. Use coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, and discover why analysts believe IGT is likely to be profitable this year, among 6 other InvestingPro Tips available at: https://www.investing.com/pro/IGT.
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