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Why Everi Holdings Inc. Stock Surged on Thursday

By Jordan Wathen – Sep 13, 2018 at 3:20PM

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A sell-side analyst sees big upside for this gaming company.

What happened

Shares of Everi Holdings Inc. (EVRI -3.20%) are on the move, rising by nearly 13% as of 3 p.m. EDT on Thursday. The pop in the share price comes after Stifel analyst Brad Boyer issued a "buy" rating on the stock, with a price target of $13 per share, which implies 58% upside from the $8.25 price at market close on Wednesday.

So what

In a note to clients, Boyer wrote that the company has "several potential catalysts on the horizon" that could send shares rising, citing the company's first-ever analyst day on Sept. 26, and the upcoming Global Gaming Expo (G2E), which will take place the second week of October.

Woman using an ATM

Everi Holdings makes its money from gaming machines and cash access services, including ATMs. Image source: Getty Images.

On the most recent earnings call, management talked about the importance of these conferences in helping the company sell more slot machines and other gaming devices to casinos and resorts. In prepared remarks on the call, Michael Rumbolz, the company's president and chief executive officer, said:

At last year's G2E, we demonstrated new products that have directly led to the progress that we are seeing today. We had several of the most talked-about products at the show. In just about two months, we'll be back at G2E, and we're excited to further demonstrate the significant strides that we continue to make in raising the level of entertainment that our games provide for players.

Everi Holdings makes its money primarily from gaming machines and cash access services and equipment (ATMs, and point-of-sale services inside casinos). The G2E event is one of the biggest expos for gaming companies to show off their new products to buyers all around the world.

Now what

It's not every day that you see a price target nearly 60% higher than the last closing price. But it's important to remember that Everi Holdings is highly leveraged, carrying more than $1.1 billion of long-term debt at the end of the second quarter, compared to a current market capitalization of $648 million. Modestly different appraisals of the company's enterprise value result in vastly different equity values.

Notably, the stock-price pop also corresponds with Bank of America Merrill Lynch's 2018 Gaming & Lodging Conference, where Everi Holdings management and other gaming companies are meeting with institutional investors throughout the day today.

Jordan Wathen has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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Stocks Mentioned

Everi Holdings Inc. Stock Quote
Everi Holdings Inc.
EVRI
$16.02 (-3.20%) $0.53

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