• Sun. Sep 19th, 2021

NeoGames Shopping for Alternative Afoot Following Submit-Earnings Slide, Says Analyst

BySpeed Casino

Aug 14, 2021

Posted on: August 13, 2021, 10:59h. 
Final up to date on: August 13, 2021, 12:17h.

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NeoGames (NASDAQ:NGMS) inventory tumbled practically 15 % Thursday following its second-quarter earnings replace, and that slide is constant as we speak. However one analyst known as response to the outcomes “puzzling” whereas noting a shopping for alternative in shares of the web lottery operators is now afoot.

NeoGames inventory marketed on the Nasdaq. A latest share stoop might be a shopping for alternative, says an analyst. (Picture: Twitter)

In a observe to purchasers launched late Thursday, Stifel analyst Steven Wieczynski reiterates a “purchase” score on the web lottery supplier, with a $71 value goal. That means upside of practically 49 % from the Aug. 12 shut.

Administration additionally cited rising consciousness/momentum for iLottery enlargement with state regulators. Whereas the state session calendar has slowed up, we predict this bodes nicely for off-peak periods and the 2022 setup,” stated the analyst.

He sees room for extra upside, as traders reassess views on web on line casino and sports activities betting equities. That would immediate them to guage the nonetheless neglected iLottery trade.
NeoGames Q2 Outcomes Have been Sturdy
Response to NeoGames’ outcomes for the June quarter could certainly be puzzling, as a result of the Israeli gaming firm reported income of $21.4 million, simply beating the Wall Avenue consensus estimate of $18 million. The operator additionally lifted its 2021 gross sales outlook by three %.

Wieczynski says the selloff might be attributable to traders overreacting to competitors in Michigan — NeoGames’ largest US market — from on-line on line casino and sports activities betting rivals. The analyst calls issues “overblown,” whereas highlighting the corporate’s spectacular ramp-up in Alberta, Canada.

“Administration cited an increasing providing and common energy in Alberta as key drivers in Q2 outperformance,” he stated.
Within the US, NeoGames can also be operational in New Hampshire, North Carolina, and Virginia, and is pursuing iLottery contracts in Alaska, Connecticut, Maryland, Massachusetts, Missouri, Ohio, and Oregon. On a convention name with analysts, NeoGames administration mentioned rising state-level consciousness of web lottery as a tax income generator.
As is the case with iGaming and sports activities betting rivals, extra state legalization could be a constructive catalyst for NeoGames and maybe its share value.
NeoGames Inventory Has Development Potential
Whereas it doesn’t generate buzz on par with web casinos or sports activities betting, iLottery is rising. Knowledge confirms as a lot, and that might be a constructive for NeoGames inventory.
“2Q21 iLottery product sales (wagers) elevated +18% y/y, however decreased -10% q/q to $1.2 billion. The annual improve was pushed by a mix of things, together with sustained macroeconomic tailwinds (Federal monetary assist, declining unemployment, rising wages, elevated discretionary earnings), robust underlying progress traits amongst many markets, and new market progress,” in keeping with Eilers & Krejcik Gaming.
Stifel’s Wieczynski says NeoGames’ steerage displays a 21 % sequential decline, which is probably going contributing to the weak spot within the shares. However he provides that response is “overblown” as a result of administration has a penchant for guiding in a conservative trend.

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