What Happened?
Shares of gaming products and services provider Light & Wonder (NASDAQ: LNW) jumped 3.2% in the morning session after an analyst at Truist Securities raised the firm's price target on the stock. The analyst, Barry Jonas, increased the price target to $130 from $110 while maintaining a "Buy" rating on the shares. This represents a significant boost of over 18% from the prior target and signals strong confidence in the gaming company's future performance. This upgraded price target reflects a more optimistic outlook on the company's growth trajectory.
The shares closed the day at $97.96, up 1.4% from previous close.
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What Is The Market Telling Us
Light & Wonder’s shares are quite volatile and have had 17 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The biggest move we wrote about over the last year was 10 months ago when the stock dropped 19% on the news that a U.S. district court (District of Nevada) granted competitor Aristocrat a preliminary injunction relating to L&W's Dragon Train game. In this case, the preliminary injunction could prevent Light and Wonder from performing certain activities (which could include activities that affect monetization) related to the Dragon Train game. Notably, the company announced plans to work on new iterations of the Dragon Train franchise consistent with the terms of the Court's ruling. To provide some clarity to investors about the potential impact of the ruling on its business, L&W reaffirmed its 2025 $1.4 billion adjusted EBITDA guidance. It further clarified that, pre-ruling, Dragon Train represents less than 5% of the $1.4 billion EBITDA estimate. However, Light & Wonder plans to appeal the decision, creating an air of uncertainty that the market doesn't like.
Light & Wonder is up 14.8% since the beginning of the year, but at $97.99 per share, it is still trading 13% below its 52-week high of $112.68 from September 2024. Investors who bought $1,000 worth of Light & Wonder’s shares 5 years ago would now be looking at an investment worth $5,910.
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