Light & Wonder, Inc. (NASDAQ:LNW) Just Reported And Analysts Have Been Lifting Their Price Targets
Shareholders of Light & Wonder, Inc. (NASDAQ:LNW) will be pleased this week, given that the stock price is up 10% to US$101 following its latest annual results. Results were roughly in line with estimates, with revenues of US$2.9b and statutory earnings per share of US$1.75. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.
See our latest analysis for Light & Wonder
Taking into account the latest results, the consensus forecast from Light & Wonder's 15 analysts is for revenues of US$3.13b in 2024. This reflects an okay 8.0% improvement in revenue compared to the last 12 months. Per-share earnings are expected to bounce 102% to US$3.66. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$3.10b and earnings per share (EPS) of US$3.54 in 2024. The analysts seems to have become more bullish on the business, judging by their new earnings per share estimates.
The analysts have been lifting their price targets on the back of the earnings upgrade, with the consensus price target rising 21% to US$114. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. The most optimistic Light & Wonder analyst has a price target of US$190 per share, while the most pessimistic values it at US$76.00. We would probably assign less value to the analyst forecasts in this situation, because such a wide range of estimates could imply that the future of this business is difficult to value accurately. With this in mind, we wouldn't rely too heavily the consensus price target, as it is just an average and analysts clearly have some deeply divergent views on the business.
Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. One thing stands out from these estimates, which is that Light & Wonder is forecast to grow faster in the future than it has in the past, with revenues expected to display 8.0% annualised growth until the end of 2024. If achieved, this would be a much better result than the 4.7% annual decline over the past five years. Compare this against analyst estimates for the broader industry, which suggest that (in aggregate) industry revenues are expected to grow 9.5% annually. So it looks like Light & Wonder is expected to grow at about the same rate as the wider industry.
The Bottom Line
The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards Light & Wonder following these results. Happily, there were no real changes to revenue forecasts, with the business still expected to grow in line with the overall industry. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple Light & Wonder analysts - going out to 2026, and you can see them free on our platform here.
It is also worth noting that we have found 2 warning signs for Light & Wonder (1 is a bit concerning!) that you need to take into consideration.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
