The sale of International Game Technology’s gaming business, positioning it for improved growth in the lottery sector, marks a significant shift. Trading at $15.81, IGT shares have been rated a Buy, with a price target set at $18 by Jefferies analyst David Katz who remarks on the company’s strengthened focus.
The Impact of IGT’s Sale: Shaping the Future of Lottery Business
Katz sees the sale as a positive step, with IGT concentrating on lottery growth trajectories. IGT aims to use proceeds to lower $2 billion in debt, offer a $3 per share dividend, and repurchase $500 million of stock.
Known now as Brightstar Lottery, IGT sold its gaming and digital units to Apollo Management for $4 billion. From this, $500 million supports Italy Lotto contract leases, and $400 million reserves for corporate purposes.
IGT’s Strategic Moves Post-Sale
Many investors anticipated varied outcomes from the sale. Katz noted potential preference for share repurchases over dividends. IGT aims to achieve three times cash flow leverage compared to the current 3.5, expecting a more predictable cash flow as a pure-play lottery firm. Further plans involve online sports betting and igaming pursuits.
Katz highlighted Italian lottery expenses exceeding expectations, which IGT must address. The analyst forecasts IGT will outline its strategies soon, enhancing earnings potential. Interested readers can explore more on IGT’s focus on lottery operations.
