UPDATE: Analysts are predicting a potential 55% surge in shares of Light & Wonder Inc (ASX: LNW) as the market reacts to recent developments surrounding a legal battle with industry giant Aristocrat Leisure Ltd (ASX: ALL). This forecast comes amid claims that Light & Wonder has breached Aristocrat’s trade secrets, raising the stakes for investors.
The shares of Light & Wonder, currently priced at $115.80, are viewed as undervalued. Analysts from Jarden suggest a price target of $180, indicating significant upside potential for investors over the next year. This comes just ahead of the company’s third quarter earnings report scheduled for November 6, 2023.
Aristocrat, valued at $40.6 billion, is pursuing legal action against Light & Wonder, alleging they have poached game developers and misappropriated trade secrets related to their game, Dragon Train. The lawsuit argues that the game shares elements with Aristocrat’s existing titles, complicating Light & Wonder’s market position.
Despite the ongoing litigation, Jarden analysts remain optimistic about Light & Wonder’s fundamentals. They predict the company’s net debt will decrease from $4.71 billion to $2.47 billion by Fiscal Year 2029, even when factoring in a hypothetical $200 million settlement. They also expect the company to initiate a significant stock buyback of approximately $920 million in the current financial year.
In a research note, Jarden analysts emphasized, “Light & Wonder is a high cash-generative business,” suggesting that the current challenges are temporary and the company is on a path to recovery.
Furthermore, Macquarie has joined the bullish outlook, issuing a price target of $180 for Light & Wonder shares, affirming an “outperform” rating. The company is anticipated to report a year-on-year earnings growth of 14% for the third quarter, projecting earnings of $363 million.
As the legal proceedings unfold and earnings reports loom, investors are advised to keep a close eye on Light & Wonder. This stock presents a compelling opportunity for those seeking substantial returns amid market volatility.
Stay tuned for more updates as this story develops. The gaming industry remains dynamic, and Light & Wonder’s trajectory is one to watch closely in the coming weeks.
