PlayAGS ( NYSE: AGS ) gained 5.36% after comfortably topping consensus estimates with its Q2 earnings report on Monday.
The casino equipment and services company saw material year-over-year growth in revenue, net income and adjusted EBITDA during the quarter off the strength of the recurring-revenue focused business model.
On Wall Street, B. Riley Securities thinks the strong AGS momentum will help shares re-rate higher.
Analyst David Bain noted AGS is gaining market share with 70% of revenue recurring from strong geographic markets.
"It is also now penetrating the high-margin/high revenue generating segment of the supplier business, premium games. Further, AGS table business is scarce, vastly recurring with over 60% margins – current and former valuation multiples of specialty table public companies range between 11x and 13x (value clearly not incorporated into AGS shares)."
AGS is said to have been quietly and consistently outperforming expectations. Looking ahead, Bain and team believe the outsized peer multiple disconnect and lead to a share price bounce.
B. Riley Securities has a Buy rating on AGS and price target of $14 to rep 155% upside potential.
For further details see:
PlayAGS is higher after earnings but B. Riley thinks the rally is only in the early innings