Boyd Gaming and Monarch Casino have been demoted due to regional gambling issues
Boyd Gaming (NYSE: BYD ) and Monarch Casino & Resort (NASDAQ: MCRI ) were downgraded on concerns that regional casinos face a sluggish consumer market.
In a note to clients, Stifel analyst Steven Wieczynski downgraded both stocks to "hold" from "buy," adding that "the underlying outlook for the regional gaming industry is, if not concerning, Doesn't seem encouraging." His price targets for Boyd and Monarch are $69 and $70, respectively. Boyd's shares closed at $62.28 on Friday, while Monarch's shares closed at $65.12.
As for Boyd, which is a major operator in Downtown Las Vegas and one of the most well-known among other local casinos in Las Vegas, Wieczynski noted that due to certain areas The market's attendance trends are concerning and revenue growth may weaken.
Based on trends to date, we expect spending weakness to continue to have the greatest impact on lower-income players in certain markets in the South and Midwest, two regions where BYD has a large presence. "The analyst pointed out.
Wyczynski acknowledged that Boyd has tailwinds, including momentum in the local Las Vegas market, a solid management team, a robust balance sheet and control of a majority of its properties.
Waiting for Monarch Casino Offer
Monarch Casino Resorts is the smallest publicly traded casino stock in the United States based on the number of properties it owns. The operator operates the Atlantis hotel in Reno, Nevada, as well as a property of the same name in the rapidly growing Black Hawk, Colorado. market.
In Reno, Monarch has struggled in recent quarters with increased promotions from competitors, and Wieczynski doesn't expect that to abate anytime soon as player behavior worsens.
When it comes to M&A, Monarch is often part of the speculation on this side of the gaming industry, likely due to its smaller size. However, it may be some time before the company officially announces the acquisition.
"Longer term, we believe the constructive arguments here will lead MCRI to the next 'Black Hawk' opportunity - namely, underinvested assets in prime markets (stable supply; reasonable tax rates; strong population/job growth trend),” Wieczynski noted. "However, few assets meet management's high standards, so we expect such transactions may take some time to materialize."
Best Area Casino Ideas at Churchill Downs
It's not entirely disappointing in terms of the outlook for regional casinos in 2024, as Stifel is bullish on Churchill Downs (NASDAQ: CHDN) , calling the stock a top pick in the regional gaming space. The research firm maintained a buy rating on the stock and raised its price target to $150 from $145. That represents a potential upside of about 18% from Friday's closing price.
Churchill Downs owns all of the real estate on which its gaming facilities are located, enjoys favorable regulatory advantages in Kentucky and Virginia and has reduced debt.
"In summary, we believe CHDN is uniquely positioned amid likely weak fundamentals for regional operators due to a pipeline of new casino projects with high return on capital, momentum from peer growth in key historic horse racing markets, and the continued success of the Kentucky Derby High-quality assets, relative resilience to margin pressures, rapidly improving balance sheet strength and full real estate ownership, and a world-class management team with a disciplined track record of capital allocation,” Wieczynski concluded.
Read also:
- Blackjack Casino Advantage: How to Beat the Odds
- Football 101: What is relegation in football?
- Sports betting in California is making progress, analysts say
- DraftKings' fourth-quarter results could be hurt by severe weather in November
Source: www.casino.org
