B. Riley Securities expects the casino supplier sector offers investors a near-term buying opportunity
"EVRI and AGS' EV/EBITDA valuations are 35%/34% below 1-year historical valuation averages, implying peer-high cuts to forward consensus EBITDA. Casino suppliers have historically proven mostly resilient to recessions and inflation, and a new casino floor capex cycle has emerged following two years of trough slot buying driven by COVID casino shutdowns."
In addition, EVRI and AGS weightings to tribal gaming markets are seen making them more resilient than peers. A recent Supreme Court decision that clarified the right for two tribes to operate Class II gaming at existing facilities is expected to secure over $10M in existing per annum recurring EBITDA for both AGS and EVRI.
B Riley Securities has a price target of $35 on EVRI (107% upside implied) and a price target of $16 on AGS. (203% upside implied)