UPDATE: B.Riley Starts PlayAGS, Inc. (AGS) at Buy
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B.Riley analyst David Bain initiates coverage on PlayAGS, Inc. (NYSE: AGS) with a Buy rating and a price target of $21.00.
The analyst comments "Majority of AGS’s revenue is generated from a percentage of win from over ~23,800 gaming units—its model less reliant on one-time sales than peers, in our view. AGS's participation-based units are primarily placed in regional/local/hyper-local locations underpinned by multiple sustainable drivers. 1Q21 domestic participation per unit win exceeded pre-pandemic/1Q19 levels, and checks cite continued win strength. AGS's product roadmap includes a push into the premium recurring market, we believe creating a $10/share value opportunity. We believe AGS is the only true alternative to a competitor’s high-priced legal table shuffler “monopoly” and calculate ~$4/share potential upside from relatively low penetration into the segment. We believe floor refreshing/normalized capex could return well ahead of and stronger than our forecast/consensus. AGS trades at 5.9x CY23E EV/EBITDA versus peers at 9.1x. In line with peers, we calculate AGS would trade for $24, or 127% higher than the June 9 closing price."
Shares of PlayAGS, Inc. closed at $10.18 yesterday.
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