The stock price of the internationally renowned gaming company, International Game Technology (IGT), experienced a decline after Jefferies downgraded its stock rating. This decision was made due to concerns about the slow progress of IGT’s announced strategic review. Jefferies lowered its rating from “buy” to “hold” and decreased the price target for IGT from $36 to $29. Despite the downgrade, Jefferies believes there is still a potential upside of approximately 11%.
In June, IGT announced a strategic review of its PlayDigital and global gaming units, exploring options such as mergers, spin-offs, or divestment of assets. However, Jefferies does not anticipate significant progress or clarity on these processes in the near future.
There have been reports hinting at potential interest from Apollo Asset Management in IGT’s global gaming division, with a transaction estimated to be in the range of $4 billion to $5 billion. Divesting assets is a common strategy for gaming companies to refocus and strengthen their other operations, as seen in the sale of PointsBet’s US-facing assets to Fanatics for $225 million.
IGT’s shares had experienced strong momentum in 2023 but began to trend downward in the fourth quarter and continued into the new year. The company is facing challenges with the slower progress of its strategic review, leading to the downgrade in its stock rating. Despite this, there is still potential for growth in the future if the strategic review yields positive results.