SG spotlighted by Fitch Ratings, Jefferies Financial Group
Pending sale of SG Lottery for $6bn drawing interest to the company.
Scientific Games was the subject of two reports this week, one by Jefferies Financial Group and the other by Fitch Ratings.
Equities researchers at Jefferies Financial Group said they have increased their FY2022 earnings per share estimates for shares of Scientific Games.
Jefferies Financial Group analyst D. Katz now forecasts the technology company will earn $0.90 per share for the year, up from the prior estimate of $0.86.
Jefferies Financial Group also issued estimates for Scientific Games’ Q4 2022 earnings at $0.73 EPS.
The analysis noted SG has been the topic of a number of other reports in the past four months. Berenberg Bank began coverage on shares of Scientific Games in a research report on October 19 that set a “buy” rating and a $98.00 target price on the stock.
On November 10, Credit Suisse Group increased its price objective on Scientific Games from $39.00 to $45.00 and gave the stock an “underperform” rating. One day later, Deutsche Bank Aktiengesellschaft upped its price objective on shares of Scientific Games from $63.00 to $71.00 and gave the company a “hold” rating in a research note.
Stifel Nicolaus cut Scientific Games from a “buy” rating to a “hold” rating and increased its price objective for the company from $84.00 to $90.00 in a research report on November 3.
On January 13, Truist Financial cut its price target on shares of Scientific Games from $110.00 to $85.00 and set a “buy” rating for the company.
The company’s stock opened at $57.99 on Wednesday. SG has a market capitalization of $5.6bn, a P/E ratio of 31.69 and a beta of 1.93. Scientific Games has a 12-month low of $36.89 and a 12-month high of $90.20. The 50-day moving average price is $63.05, while the 200-day moving average price is $70.13.
Jefferies Financial noted Scientific Games last issued its quarterly earnings results on November 9, reporting $0.96 earnings per share for the quarter, topping the Zacks’ consensus estimate of $0.45 by $0.51. Scientific Games had a net margin of 6.39% and a negative return on equity of 5.54%. The firm had revenue of $539m during the quarter, compared to analysts’ expectations of $759.57m.
Separately, Fitch Ratings assigned Scientific Games Holdings LP (SG Lottery) an expected first-time Long-Term Issuer Default Rating of “B(EXP)” with Stable Outlook.
The firm also assigned SG Lottery’s senior secured credit facility, consisting of a $440m revolver and a $1.77bn and €750m term loan B, expected “BB-(EXP)” rating with a Recovery Rating “RR2.”
According to Fitch, the rating of SG Lottery reflects its “high” leverage once it is acquired by Brookfield Business Partners’ for approximately $6bn. Fitch estimates gross leverage of 7.5x at the closing of the acquisition, before it improves marginally over the medium term through EBITDA growth.
Rating strengths are SG Lottery’s solid market position in the lottery industry that generates high margins, durable cashflows and discretionary free cash flow, Fitch added, noting the final ratings are contingent on the transaction closing as contemplated and receipt of final documents conforming materially to preliminary documentation reviewed, including sizing of all debt instruments.
“Changes to the amount of debt issued by class could have rating implications,” Fitch said in a statement.
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