Potential Investment Opportunity: Golden Entertainment could be a profitable choice due to speculated property sales slated for 2025, as per an analyst's analysis

Golden Entertainment, a well-known casino operator, has caught the attention of Deutsche Bank, which has issued a Buy rating for the company's stock. This positive outlook comes with a base case math that implies an equity valuation of $40 for Golden Entertainment's shares.

However, the first quarter of 2025 may present a modest headwind for Golden Entertainment, with the Super Bowl expected to have a $1 million impact on the company's Las Vegas operations.

Looking ahead, a potential sale of Golden Entertainment's real estate could drive a significant increase in the stock, potentially resulting in a 20% or more rise. Analyst Carlo Santarelli believes that Golden Entertainment would be open to such a sale if market conditions improve.

In the meantime, Santarelli predicts that Golden Entertainment could hypothetically return $140 million to shareholders (14% of the current market cap) through repurchases in 2025. This is based on forecasts for the year.

The Nevada casino segment is expected to experience a double-digit decline in EBITDA in 2024. However, Santarelli expects Golden Entertainment to buy back approximately 9% of its market cap in the same year, with the buyback agenda expected to continue and potentially accelerate into 2025.

The stabilization of the STRAT, one of Golden Entertainment's key properties, is crucial for 2025, according to Santarelli. The STRAT is expected to benefit from an improved marketing effort, more robust programming, easy comparisons, and improved midweek occupancies in 2025.

The $36 price target set by Deutsche Bank for Golden Entertainment's stock is consistent with historical market multiples. Santarelli believes the capital-return story could be unique for Golden Entertainment due to its smaller float and strategic alternative perceptions.

Potential companies that could negotiate with Golden Entertainment in a hypothetical sale of real estate include major real estate investment firms and private equity companies active in the multi-housing and commercial property sectors such as JLL, KKR, and Freddie Mac. However, there is no specific public information confirming direct negotiations with Golden Entertainment or the probability of such a sale occurring in 2025.

Any signs of stability at the property in 2025 would serve as a positive catalyst for Golden Entertainment's shares at current levels. It's worth noting that the capital-return story has not proven fruitful for Golden Entertainment's peers.

The stock has been trading just above $30, with Deutsche Bank maintaining a price target of $36. Despite the current challenges, the future looks promising for Golden Entertainment, with potential growth opportunities on the horizon.

Potential Investment Opportunity: Golden Entertainment could be a profitable choice due to speculated property sales slated for 2025, as per an analyst's analysis