Bally's Rewards Appear Attractive Amidst Downward Trend
After a series of substantial losses in the stock market that have lowered its value by approximately a third in the past month and 53.72% year-to-date, Bally's (NYSE: BALY) shares may be due for a rebound. This is according to Stifel analyst Jeffrey Stantial, who recently issued a report on the regional casino operator with an upcoming earnings report on the 1st of November.
Stantial maintained his "hold" rating on Bally's while reducing his price target from $16 to $10, implying a potential 11.4% upward movement from the closing price of $8.87 on the day of his report. He noted that despite recent underperformance, several factors could contribute to a potential rally for the company. These include:
- Bottoming North American Interactive losses
- Better-than-feared performance in the U.K.
- Cost-cutting options
- Margin outperformance in the Casinos
- Increasing cash flows from the Chicago temporary casino
Bally's operates 17 gaming venues across 10 states, including its namesake in Atlantic City and the Tropicana in Las Vegas.
Bally's Medium-Term Outlook: Mixed Signals
Despite the possibility of meeting or exceeding analysts' expectations for earnings and revenue in the third quarter, concerns linger about Bally's brick-and-mortar casinos' future. The industry is worried about the impact of high inflation and interest rates, which are influencing consumer spending patterns and reducing disposable income. While the Consumer Price Index (CPI) may have started to decline, it remains well above pre-pandemic levels, which could adversely affect Bally's and other regional casino operators.
However, Stantial is cautiously optimistic, acknowledging that Bally's could experience positive outcomes if macroeconomic pressures ease sooner than expected.
Potential Catalysts for Bally's Stock
Though the near- to medium-term outlook for regional casino stocks, including Bally's, is unclear due to ongoing inflation and interest rate concerns, Bally's could present investors with some stock-specific catalysts. These include updates on the performance of the newly opened temporary casino in Chicago.
In September, the casino reportedly generated around $7 million in Gross Gaming Revenue (GGR), below investors' expectations, likely due to inadequate marketing efforts ahead of the hard launch on October 2nd. Stantial anticipates that management will provide more details on the Chicago property's performance following this date, which could serve as a more accurate reflection of its prospects.
Additionally, other potential catalysts that might impact Bally's stock value more positively include potential asset sales and developments related to the company's efforts to obtain a casino license in New York City.
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Source: www.casino.org
