PlayAGS stock has potential to double, analyst B. Riley says
Posted: Jun 12, 2021, 5:05 a.m.
Last update on: Jun 12, 2021, 5:44 a.m.
Quietly, PlayAGS (NYSE: AGS) stock is one of the best performing gaming stocks this year, and one analyst is betting there is a lot more to be gained.
In a recent note to customers, B. Riley’s analyst David Bain launched a cover of the technology and casino games provider with a âbuyâ rating and a target price of $ 21. This implies that stocks can almost double since the June 11 close at $ 10.80. The analyst sees an array of catalysts that could push up shares of the Las Vegas-based company.
We expect AGS’s product roadmap to substantially penetrate the $ 1.5 billion premium casino gaming segment, which is AGS’s current white space, âBain said. âAdditionally, AGS’s high-margin, recurring revenue tabletop business is under-tracked and undervalued, especially given its expansion of the 2H21 tabletop mixer, in our opinion.
The analyst’s bullish outlook on PlayAGS comes at a time when some of the game’s actions are procrastinating. But this is far from the case for the manufacturer of electronic game machines and table games, among other products. Helped by a 29.65% gain over the past month, PlayAGS is up 50% year-to-date.
PlayAGS Stock Powerful Game Idea
With a market capitalization of just under $ 418 million, PlayAGS is one of the smaller names of publicly traded games in the United States. This affirms its status as a hidden gem, but it doesn’t diminish its potential power for investors.
The actions of PlayAGS are strongly requested to strengthen in regional casinos, because 80% of its recurring income comes from these sites. The company has nearly 24,000 gaming participation units, which can be found in casinos in regional markets and those heavily frequented by locals. This ties the actions to themes such as pent-up demand, rising COVID-19 vaccination rates, and older gamers returning to their favorite local gaming venues. In fact, some of the company’s metrics are already ahead of pre-pandemic levels.
“National participation per unit earned in 1Q21 has surpassed pre-pandemic / 1Q19 levels, and audits cite continued winning strength, âBain said. âThe performance improvement is due to strong hospitality markets, pruning of underperforming locations / units, improved content offerings and a new, higher mix of premium recurring revenue game installations. , in our opinion. “
PlayAGS: a history rich in catalysts
Even with the recent stellar performance of PlayAGS, the name of the game has plenty of tailwinds, including a long track with which to increase market share in the premium gaming segment.
“AGS’s premium gaming market penetration is well below one percent, leaving a lot of white space. AGS only recently started a substantial push into the premium segment, increasing its premium unit base during the pandemic, âBain said.
If the company could increase its share of premium games to 3%, it would be worth $ 10 per share, which is not factored into B. Riley’s price target, according to the analyst.
In addition to the case of PlayAGS, even with the recent stock surge, it remains cheap, trading at 5.9 times the estimated enterprise value / earnings before interest, taxes, depreciation and amortization (EBITDA) in 2023, compared to 9.1 times for the competitors. If the name matches its peer group, it could trade for up to $ 24, Bain adds.