Positive Outlook for L&W Despite Dragon Link Litigation
Date: 2024-09-26 Author: Robert Beloved Categories: EVENTS
Last week, Aristocrat Technologies, one of the world’s largest providers of gaming hardware and solutions, took decisive steps in its legal battle with Light & Wonder (L&W) over its Dragon Link game. However, despite this, L&W did not suffer any significant losses, although its shares fell slightly.
Macquarie Analyst Maintains Positive Outlook
As a result of a US court ruling in favor of Aristocrat, L&W was forced to temporarily suspend sales of its Dragon Train slot machines in Australia. However, the leading analyst is still positive, albeit with a degree of caution.
Before the ruling, L&W told its investors that it expected to generate $1.4 billion in profit (EBITDA) by 2025. The company also stressed that the games involved in the lawsuit represent less than 5% of that total.
Macquarie’s top analyst Chad Beinnon believes that despite the current challenges, L&W is not out of trouble yet. He maintained an “outperform” rating on the stock and reiterated his price target of $117 per share, a 27.7% premium to the market price at Wednesday’s close.
However, Beinnon cautions that the company lacks significant near-term growth drivers. An additional concern is the ongoing lawsuit with Evolution, which accuses L&W of copying math and payout structures for board games.
Little Impact from Litigation
Earlier this month, Jefferies analyst David Katz also expressed optimism about L&W, reiterating his positive outlook after meeting with the company’s management. He maintained his “buy” rating and increased his price target to $128 from $116.
On September 23, Judge Gloria M. Navarro ruled in favor of Aristocrat, halting any sales or rentals of Dragon Train slot machines by L&W. The ruling was based on allegations that Aristocrat had misappropriated trade secrets in developing the game.
