Third-quarter numbers for manufacturer Everi Holdings came in below Wall Street expectations. But due to the pending acquisition by Apollo Management, the results “should have a minimal impact on the shares,” wrote Jefferies Equity Research analyst David Katz in a December 2 investor note. The Apollo takeover of Everi is expected to close between July and September of next year.
“The quarter reflects the competitive pressures evident before the deal announcement,” wrote Katz. He maintained a Hold rating on stock which was trading at $13.47 a share when he released his report. But he ratcheted his price target up to $14 per share from $9.
While Wall Street expected $200.7 million in quarterly revenue from Everi, the company delivered $187.9 million. On the other hand, an anticipated loss of $13 million turned out to be only $2.6 million.
The company’s gaming division was the biggest loser, bleeding $15.4 million in red ink (a $9.6 million loss was anticipated). The company’s $91.5 million in revenue compared to Wall Street’s outlook of $101.8 million.
The fintech branch performed better for Everi, yielding revenue of $96.3 million, although $98.9 million had been projected. The division turned a profit of $26.8 million, below the $29.3 million that was expected, “as strength in financial access and software was offset by lower hardware revenues,” according to Katz.
Gaming operations experienced a 400-machine decrease in sales year over year, as 1,009 units where shipped. Everi’s installed base shrank to 16,440 machines, with an average win per unit per day of $33.63, seven percent below Wall Street’s hopes. The average sale price per machine was $20,619.
Given those outcomes, Katz reduced Jefferies’ projections for Everi to year-end revenue of $772.2 million and cash flow of $300.7 million. The previous expectations had been for $812.2 million and $352.6 million, respectively.
For all of 2025 (pending the close of the Apollo deal), Katz projected revenue of $826.2 million, down from $851.1 million. His cash-flow prognosis went down from $355.5 million to $337.5 million.
Katz took the long view on Everi stock, arguing that, while the pending merger with parts of International Game Technology would continue to pressure Everi shares, a rebound in the slot-machine market was accelerating. Growing demand for fintech solutions was also cited by Katz as a potential, increasing Everi tailwind, while the flexibility of the company’s balance sheet was deemed still another asset.
