PlayAGS (NYSE: AGS) is turning heads with an impressive 30.37% surge in its shares this year, outperforming many small-cap gaming stocks. But hold on tight because some experts believe there’s even more upside ahead for this slot machine manufacturer!
In a recent note to clients, the renowned B. Riley analyst, David Bain, reaffirmed his “buy” rating on PlayAGS and set a bold price target of $14, implying the Las Vegas-based company’s stock could soar to more than double its current value of $6.70! With the earnings report scheduled for August 3, Bain predicts another earnings beat, pointing out that PlayAGS is likely gaining significant market share.
And that’s not all! Bain also expects the second-quarter free cash flow results to reveal a remarkable net leverage reduction transparency to 3.5x or lower by the end of this year. Now that’s some serious momentum!
PlayAGS is on a catalyst-rich journey
The buzz is that PlayAGS kicked off the second quarter with gusto, displaying robust client purchasing trends over the past two to three months. Wall Street’s anticipations include high single-digit sales growth for the company this year, paving the way for an increasingly catalyst-rich story surrounding PlayAGS. Investors can look forward to market share gains in both recurring revenue and unit sales segments.
But that’s not all! PlayAGS has expanded its product categories, with its high denomination offering adding to its market share prowess. The company has also fine-tuned its overall process in tandem with remarkable product momentum, taking significant strides towards success. The growing sales team, now boasting 25 members compared to 13 in 2019, further cements PlayAGS’s stronghold in the industry.
Recurring revenue and financial position–a winning combo?
PlayAGS’s business model hinges on recurring revenue and domestically installed slots, accounting for around 70% of its operations. This combination has proven to be a winning formula for the company’s continued success.
What’s more? PlayAGS is currently undervalued relative to its peers, which is enticing investors looking for promising opportunities. As the company strengthens its financial position, its stock becomes all the more appealing. Earlier this year, PlayAGS unveiled its plans to lower leverage to a range of 3.25x to 3.75x—a move celebrated by Wall Street. Now, all eyes are on the second-quarter earnings update, eagerly waiting for management’s insight into the successful deleveraging efforts.
If all goes well, brace yourselves for even greater heights as the positive free cash flow inflection in the second quarter and PlayAGS’s net leverage guidance take center stage. Bain’s optimism seems contagious, making PlayAGS one of the hottest stocks in the gaming arena.
So, dear readers, as PlayAGS takes center stage, prepare to roll the dice and enjoy the ride on this exhilarating slot machine boom! Spin the reels and watch your investments soar high with PlayAGS!
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