Everi Stock Supported by Healthy Industry Trends, Expanding Market Share

Posted on: August 22, 2022, 02:46h. 

Last updated on: August 24, 2022, 12:29h.

Shares of Everi Holdings (NYSE:EVRI) are following the broader gaming equity space lower on Monday. But one analyst sees reasons to be bullish on the gaming supplier.

Everi stock
A slide from an Everi Holdings investor presentation, above. An analyst sees upside potential for the stock. (Image: Seeking Alpha)

In a note to clients today, B. Riley analyst David Bain reiterated a “buy” rating on Everi stock, with a $35 price target. That implies upside of almost 75% from the Aug. 19 close. The analyst’s positive comments on Everi emerge following a recent meeting with CFO Mark Labay and Senior Vice President of Investor Relations Bill Pfund.

Management noted broad casino strength observed by withdrawal activity within its market share leading fintech business. Year-over-year casino withdrawal volumes accelerated in July from June and are trending higher in August than in July,” wrote Bain.

A significant driver of the Everi investment thesis is the company’s fintech offerings, underpinned by the move to cashless gaming at casinos across the country — one sped along by the coronavirus pandemic.

Examining Everi Stock Upside Potential

Although it’s down 4.45% year-to-date, Everi is among the best-performing gaming equities in 2022. It’s amidst an impressive rally of late, surging almost 32% off its July low.

Not only is the Everi thesis supported by strong casino visitation trends, which could lengthen the domestic slot machine upgrade cycle. But those factors provide ballast for the company’s burgeoning fintech operations.

While Everi’s fintech story is an increasingly prominent part of the equity thesis, it’s also still in its early innings. The company’s gaming device business is levered to the ongoing recovery in visitation levels at the Las Vegas Strip and regional and tribal casinos. That’s while its fintech operation is tethered to the still-nascent move by operators to cashless gaming.

“Management noted continued strength in mechanical reel games and additional, recent strength in the video segment, a larger category with faster replacements than reels. Video success is underpinned by its Empire Flex cabinet, and management cited upcoming new video cabinet offerings at October’s G2E gaming show in Las Vegas,” added Bain.

Everi Pleasant Surprises Possible

On the back of Sky River, a California tribal casino managed by Boyd Gaming, recently embracing Everi’s fintech suite, Bain lifted his 2023 sales estimate for the company’s fintech arm by 3%.

EVRI stated it is on pace to go live with digital fintech in an additional 20 casinos, versus 19 at the end of 2Q22,” he said in the report. “We believe Sky River could be a top 10% GGR-generating North American casino. Further, Boyd is not an EVRI corporate customer, signaling at least a potential willingness by Boyd to review EVRI as its full fintech supplier longer-term, in our view.”

It remains to be seen if the Boyd/Everi relationship expands in the future. But that would undoubtedly be compelling for the gaming supplier because Boyd is one of the largest regional operators in the country and has a dominant presence in the Las Vegas locals market.