On Tuesday, Stifel analysts reiterated their Buy rating on International Game Technology (NYSE:IGT) with a steady price target of $26.00, well within the broader analyst range of $22-$35. Currently trading at $17.43, near its 52-week low, IGT has caught analysts' attention. The firm's analyst, Jeffrey A.
Stantial, provided insights into the Italian gaming regulator's recent Request for Proposal (RFP) for the Italian 'Lotto' lottery contract, which was published on Friday morning. The RFP outlined application scoring and deadlines that Stantial believes could be incrementally favorable for IGT. According to InvestingPro data, IGT maintains strong financial health with a perfect Piotroski Score of 9, suggesting robust operational efficiency.
The RFP details revealed that the contract would maintain its established conditions, including the contract length, take-rate, and a minimum €1 billion upfront fee. Stantial's analysis highlights that while International Game Technology awaits a formal bid and joint venture consortium announcement from FLUT, the company remains on Stifel's Select List.
The analyst's valuation approach suggests a significant undervaluation compared to historical incumbent win-rates and the perceived actual probability of success. This view is supported by IGT's strong financial position, with InvestingPro data showing liquid assets exceeding short-term obligations with a current ratio of 2.36.
Stantial's initial assessment of the RFP document, supplemented by industry discussions, focuses on two new parameters. Firstly, the scoring methodology gives a 60% weight to the price offered, which is higher than the European or U.S. averages but lower than the previous Lotto RFP.
This shift is seen as potentially advantageous to IGT, which benefits from its position as the current operator, its deep experience in the lottery sector, and ownership of the necessary technology.
Secondly, the RFP sets a submission deadline of March 17, aligning with the expected early-Q2 selection timeline outlined in the CY25 Italian budget. This deadline is thought to give an edge to companies with significant scale and experience in the lottery industry.
The Stifel team has not made any changes to their model or the target price for IGT, indicating confidence in their previous assessment. The analysis by Stifel suggests that IGT's expertise and incumbency in the lottery space, along with the new RFP details, could position the company favorably in the upcoming bid for the Italian Lotto lottery contract.
With impressive revenue growth of 46.94% over the last twelve months and a track record of maintaining dividend payments for 10 consecutive years, IGT demonstrates strong operational performance. For deeper insights into IGT's financial health and growth prospects, including 10+ additional ProTips and comprehensive analysis, visit InvestingPro.
In other recent news, International Game Technology (IGT) has seen significant developments. Stifel analysts have adjusted their outlook on IGT, reducing the price target from $30.00 to $26.00, but maintaining a Buy rating.
This adjustment is largely due to the anticipated sale of IGT's Gaming & Digital business to Apollo for $4.05 billion in cash by the end of the third quarter of 2025. The analysts expect a positive re-rating for the remaining lottery-focused segment of IGT post-sale, due to its infrastructure-like attributes.
On the earnings front, IGT reported a strong financial performance in its Q3 2024 earnings call. The company reported a revenue of $1.9 billion for the first nine months, with Adjusted EBITDA reaching $880 million. The company is implementing the OPtiMa 3.0 initiative to optimize costs and improve operational efficiency, with an aim to deliver $40 million in annualized savings by 2026.
These developments show IGT's strategic transition towards becoming a leading lottery pure-play firm, while maintaining robust profit margins and cash generation. The company also anticipates sustainable growth in the lottery sector, with new game launches and a potential Mega Millions pricing increase in April 2025.
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