Is IGT Stock A Buy?

International Game Technology PLC (NYSE:IGT) is a London, U.K.-based gaming technology company that makes slow machines and other gambling-based products and services. The gaming industry was hit especially hard travel restrictions; it’s highly dependent on tourism.

Now that travel is picking back up, is IGT stock a Buy?

The company has a lot of solid partnerships, like Bally’s, and it has offices in Las Vegas, Rome, and Providence, Rhode Island and has contracts around the world for gaming and gambling.

The amalgamated company is the result of a lot of mergers and acquisitions. It’s come a long way from the 2020 market crash, and after reporting $1 billion in revenue in the first quarter of 2021 alone, many investors believe this company could be underweight when trading below $5 billion.

IGT Has A Long Pedigree In Gambling

International Game Technology is a gambling company that produces slot machines, runs state lotteries, and more gaming technologies. It started in 1990 as an Italian gaming company called Lottomatica, which acquired U.S.-based Gtech Corporation in August 2006 and took on its name.

In 2014, it bought IGT, which was the world’s largest slot machine manufacturer at the time. The $6.4 billion purchase combined under a holding company was completed April 2015.

The company consistently negotiates lottery deals with local legislators, and it’s involved in the growing sports betting and digital gaming businesses. In fact, it provides entertainment and gambling-related services across all regulated channels and in all business segments.

In essence, it’s a full-service technology and lobbying company that has deep expertise in all matters of the global industry. This makes it a lucrative B2B play that should profit alongside industry growth, regardless of which of its gaming partners succeeds.

That has analysts wondering if now’s the time to buy in.

Is IGT Stock A Buy?

Most analysts have IGT rated as a Buy with a price target in the range of $30.00. This would value it around $7 billion and could provide a quick gain for investors who jump in early enough. IGT share price already took off like a rocket after the earnings call.

The $1 billion quarterly haul is the first time the threshold has been eclipsed since the fourth quarter of 2019. And it’s nearly a 25 percent increase from the same quarter in the prior year.

CEO Marco Sala explains that “robust player demand and significant, structural cost savings,” are what’s fueling this growth. He believes the global gaming industry is well on its way to recovery, and that momentum could accelerate as sports betting and digital gaming laws are relaxed around the U.S.

What held the firm back so long was a federal law that was ruled unconstitutional by the Supreme Court, allowing a flood of states to determine the legality of these activities on their own. This could lead to explosive growth in the industry, and a 2x return could become a 10x return in a shorter time than we think.

Global Regulation Remains A Key Risk For IGT

The biggest risk to IGT is legislation. Although many states and countries are loosening gaming laws, others are making them more stringent. Each government around the globe is getting more technologically savvy and finding ways to legislate things like cryptocurrency, for example.

And just because legislators may agree with gaming doesn’t mean everything is free and clear.

Even technology giants like Google (GOOG), Amazon (AMZN), and Facebook (FB) face regulatory heat, and they’re not involved in any of that. No matter how clean you keep your nose, there’s a good chance the government will come in and swing its “ban-hammer.” Working in a vice industry only increases the risk.

Nevertheless, IGT should be in a good position, so long as its rivals don’t creep up on it.

Can IGT Competitors Win?

IGT operates deep in the supply chain of a highly regulated industry. As a result, it enjoys a protective moat. For an ambitious competitor, it would take a lot of capital to even get in the game. With that said, there are companies in the game already. Scientific Games Corporation, WMS, and Amaya all have a stake in the game.

This is a high-stakes game everyone’s playing, and any split-second decision could mean the difference between success and failure for IGT.

It would be foolish to assume that just because the overall gaming industry is growing that this company is guaranteed to grow with it. There is a plethora of things that can go wrong in that could stunt its growth or lead any of its competitors to eat its lunch.

Is IGT Stock A Buy? The Bottom Line

IGT is a well-established global tech conglomerate that services the gaming and gambling industries. It provides slot machines, lottery services, sports betting, and more to be a vertically integrated solution for any B2B needs. That positions it well to recover from the rebound of the gaming industry.

Gambling is a good bet for investors moving forward – if the economy slows, people are more likely to play the lottery or hit a casino.

The primary obstacles that stand in its way are the government and other rivals. From a financial perspective, the upside is high still. A discounted cash flow analysis forecast reveals upside in share price for IGT as high as $27.40 per share.

Analysts on the whole are bullish on the company with 75% rating the firm a Buy and the balance keeping a Hold recommendation; no Sell recommendations have been issued.

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The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.