Everi Cruises Higher as Analyst Highlights Cashless Gaming Opportunity

Posted on: September 9, 2020, 12:39h. 

Last updated on: September 9, 2020, 02:08h.

Todd Shriber @etfgodfather Read More
Expertise: Financial, Gaming Business, Mergers and Acquisitions.

Shares of Everi Holdings (NYSE:EVRI) are higher by more than seven percent in late trading after BTIG analyst Mark Palmer started coverage of the gaming device maker. He noted the company is well-positioned to capitalize on casinos’ shift to cashless gaming.

Cashless Casino Everi Holdings
Cash is on its way to becoming a relic at casinos, and analysts say that benefits Everi. (Image: NY Post)

Palmer initiates analysis of Everi with a “buy” rating and a $12 price target, implying an upside of nearly 70 percent from the Sept. 8 close. That’s enough to put the stock on pace for its best intraday performance in close to a month.

Everi shares are ‘poised to benefit’ from the pandemic’s acceleration of demand among its casino customers for cashless and contactless funding solutions,” according to The Fly, a financial news site, citing Palmer’s research.

Las Vegas-based Everi operates in two segments: gaming devices and fintech. It’s the latter that’s stoking Wall Street enthusiasm for the stock.

Cashless Call

At the height of the coronavirus pandemic, Everi stock lost 96.3 percent of its value, sparking concerns about the company’s viability. The investment community speculated the firm could succumb to rising debt and dwindling demand for gaming machines amid slack casino foot traffic.

But that chatter overlooked Everi’s ace in the hole: enviable positioning in hardware and services for cashless gaming.

If there’s one benefit of COVID-19 to the gaming industry, it’s a renewed emphasis on health and safety protocols. Reducing the use of cash in casinos is an efficient avenue for operators’ safety bolstering those efforts, and some executives are going so far as to call cash “antiquated.”

That could be music to the ears of Everi investors, as would be increased state-level liberalization of money transfer policies that are more compatible with the reduced emphasis on cash.

Palmer, the BTIG analyst, points out the Nevada Gaming Commission (NGC) took related steps in June, and he expects other states will soon follow suit.

Right Place, Right Time

There isn’t conclusive research confirming that cash acts as a transmitter of the coronavirus. However, some clinical studies indicate the composition of US bills — 25 percent linen and 75 percent cotton — can retain bacterial and viral diseases longer than other surfaces.

While handling cash doesn’t guarantee casino employees or patrons will contract COVID-19, the World Health Organization (WHO) said earlier this year anyone often handling bills should frequently wash their hands while advising businesses move to other forms of payment.

Specific to Everi and its fintech opportunity set, data confirms that earlier this year, credit and debit cards topped cash as a form of payment for the first time. That’s on a global basis and not specific to the gaming industry. But the statistic proves that there’s a long runway for growth with Everi, because the move away from carrying bills is in its nascent stages.

Some analysts believe Everi’s Cashclub Wallet isn’t yet appropriately valued by the investment community, and that as that concept takes hold, there are avenues for the company to win market share, not only in land-based venues but with online casinos as well.