International Game Technology PLC (IGT)

International Game Technology PL (IGT) stock dropped by 8.48% due to a downgrade rating and a cut in price target. Here are the details:

• Downgrade rating: Stifel's downgrade from Buy to Hold and a slight downward revision of the price target to $30 from $31. Stifel's analysis expresses long-term confidence in IGT's prospects, especially after the announcement of a spin-off expected to act as a significant catalyst.
• Spin-Off Details and Impact: The spin-off aims to establish a more efficient capital structure and shareholder base for IGT's lottery segment, with minimal negative synergistic effects. Stifel estimates the potential value of the MergeCo ownership to contribute approximately $5-6 per share. Comparing to its lottery peers, Stifel suggests a fair value of around $33 per share for IGT, a 21% increase from the last closing price.
• Tax Implications and Investor Caution: The chosen taxable spin-off structure, a Reverse Morris Trust, is expected to provide MergeCo with greater capital allocation flexibility post-spin. However, investors may face a tax on gains from the sale of the Global Gaming + PlayDigital business. This tax implication might prompt potential investors to delay building positions in RemainCo until after the spin-off is finalized.
• Stifel's Adjustments and Forward-Looking Statements: Stifel made minor adjustments to its standalone IGT model, increasing the 2024 Global Lottery Adjusted EBITDA and Global Gaming Adjusted EBITDA projections by 1% each, based on currency movements and management's forward-looking statements.