An analyst with Union Gaming has predicted that the lottery business of gaming supply giant International Game Technology, PLC could make up 75 percent of the company’s adjusted pre-tax earnings by 2020.
In a Q4 research note, Union Gaming analyst John DeCree reported that IGT saw total revenue decline 15 percent year-on-year to $885 million but lottery increase 11 percent to $630 million, calling lottery the “shining star” in IGT’s portfolio.
“IGT’s business mix is shifting heavily towards lottery,” DeCree wrote. “We estimate in 2022 that Global Lottery will comprise 75 percent of IGT’s segment-level adjusted EBITDA, with the Global Gaming segment accounting for just 25 percent. The lottery business is showing strong growth trends in recent quarters and has proven resoundingly resilient during the pandemic.”
The lottery results reflected an 8 percent increase in instant ticket and draw-game sales in North America. The company’s Global Gaming segment saw a 46 percent decline in revenue during the same period.
“We believe IGT is a compelling buy here given the strong growth fundamentals in the lottery business and the substantial discount at which the shares trade (7X) relative to the lottery peer group (14X),” De Cree said.
