Global gaming supplier Light & Wonder is poised to surpass its ambitious goal of achieving an annual EBITDA of US$1.4 billion by 2025, according to insights from investment bank JP Morgan. The optimistic forecast follows the company’s recent secondary listing on the Australian Securities Exchange, prompting JP Morgan analyst Don Carducci to initiate coverage and set a price target of US$98.00, showcasing confidence in the company’s potential.
Financial Projections
JP Morgan’s Don Carducci, in a recent note, expressed a positive outlook for Light & Wonder, emphasizing the company’s promising position in the Australian market. Carducci believes that the company is well on its way to exceeding the projected EBITDA target, stating, “LNW will exceed its 2025 EBITDA target of US$1.4 billion, and our estimates present 2%/4%/5% upside to FY23/24/25 consensus.”
Historical Context
The foundation for Light & Wonder’s ambitious target was laid during an investor day in mid-2022, where the company unveiled its US$1.4 billion EBITDA goal. This announcement coincided with a corporate restructure, with Matt Wilson taking the reins as the new CEO in October 2022. In a recent interview, Wilson shed light on the company’s audacious aspirations, emphasizing a commitment to transformation and bold, ambitious goals.
Journey to Success
Wilson highlighted the initial skepticism surrounding the lofty targets set in May 2022, stating, “When we put those numbers out, we got no credit for them. People thought it was a nice fictional story. But … we’ve had sequential quarters of amazing growth, and I think people are now saying, ‘Wow, they’re actually on the path to do this’.”
Product Impact
A significant factor contributing to Light & Wonder’s positive trajectory is the recent release of its Dragon Train family of games. Specifically designed with the Australian player and customer in mind, these games have proven successful in increasing turnover ratios. Carducci notes that Dragon Train has elevated Light & Wonder’s average turnover ratio in New South Wales and Queensland, and anticipates a substantial increase in installed games by FY25.
Regional Expansion
Carducci predicts that Dragon Train will reach 8,000 installed games in NSW and Queensland by FY25, a significant surge from the 1,700 installed in 4Q23. This expansion showcases the company’s effective market penetration strategy and underscores its ability to tailor products to regional preferences.
Leadership Impact
The appointment of Matt Wilson as CEO is identified as a pivotal moment in Light & Wonder’s journey. Wilson’s leadership style, characterized by boldness and a commitment to transformative goals, aligns with the company’s vision for significant growth. His emphasis on being “a company that’s doing big things and big transformational things” reflects a strategic approach to achieving the set targets.
Investor Confidence
The positive outlook from JP Morgan adds another layer of confidence to Light & Wonder’s growth narrative. With the recent secondary listing on the Australian Securities Exchange, the company has positioned itself strategically, attracting the attention of reputable analysts who foresee a bullish future.
Light & Wonder appears to be on a robust growth trajectory, supported by strategic leadership, innovative product offerings, and a favorable market reception. The company’s journey from setting ambitious targets to gaining credibility through actualized growth reflects a commitment to pushing boundaries and achieving transformative success. As it continues to capture market share and expand its product portfolio, Light & Wonder’s evolution remains one to watch in the dynamic landscape of the global gaming industry.