Light & Wonder (ASX:LNW) shares continue to face several near-term overhangs around litigation risks, but operating fundamentals remain intact with an improving free cash flow, according to a Thursday Jefferies note.

The company reported Thursday third-quarter adjusted earnings of $1.81 per share, up from $1.34 in the same quarter a year earlier. Also, the company said it intends to extend its $1.5 billion buyback program of its Nasdaq-listed outstanding common stock to include its Chess depositary interests on the Australian Securities Exchange from Friday.

The investment firm said that its valuation incorporates a 25% discount to reflect ongoing litigation uncertainty, but it believes that the company remains a double-digit net profit after tax and amortisation growth story trading at an attractive valuation.

Jefferies maintained a buy rating on Light & Wonder with a price target of AU$157.

The company's shares rose 1% in recent Friday trade.