Now could be the time to pounce on one beaten down ASX 200 stock in particularly according to analysts at Bell Potter.
The share in question is Light & Wonder Inc (ASX: LNW).
It is the leading cross-platform global games company with three unique, but highly complementary businesses. Management notes that it aims to create immersive content that forges lasting connections with players, wherever they choose to engage.
With its shares down almost 25% from their 52-week high due to market weakness and concerns over legal action, Bell Potter thinks investors should be backing up the truck.
Commenting on the legal action from rival Aristocrat Leisure Ltd (ASX: ALL), the broker said:
Aristocrat Leisure (ALL, Buy; TP $85.00) has escalated its legal fight against LNW with a second amended complaint. The updated filing: (1) bolsters ALL's copyright infringement and trade dress case against LNW's Jewel of the Dragon (JOD) game; (2) asserts that LNW's efforts to develop successors to Dragon Train (DT) continue to misappropriate its trade secrets and infringe on its trade dress rights, even if built with different math models; and (3) claims that information stolen by a former LNW designer was widely disseminated within LNW.
The case is to be heard by jury in 2026. We estimate that JOD and DT generated US$70-85m in EBITDA globally, over their lifetimes, an amount LNW could be found liable for.
But given that the broker is forecasting EBITDA of US$1,465 million in FY 2025 and then US$1,654 million in FY 2026, it would be disappointing but not a massive blow to the ASX 200 stock's earnings if found guilty.
In light of the above, the broker thinks that this ASX 200 tech stock has been oversold and could generate big returns over the next 12 months. It said:
We believe the market is again pricing in a worst-case scenario regarding the ALL legal matters. We expect LNW's cross-platform strategy and leading scale will produce a portfolio of high-performing games in both land-based and digital markets. We continue to expect improvement in product quality to strengthen LNW's competitive advantage, supporting market share gains. At 10.8x NTM EV/EBIT(A), LNW trades at a ~37% discount to close comp ALL.
Bell Potter has put a buy rating and $197.00 price target on its shares. Based on its current share price of $138.29, this implies potential upside of 42% for investors between now and this time next year.
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