Michael Jagla
CBRE Equity Research resumed coverage on Las Vegas Local Gaming stocks.
Analyst John DeCree and team said they are optimistic about the long-term secular growth trend of the overall Las Vegas local market. Your trust It is said to be supported by significant population migration to Las Vegas, particularly among higher-income demographics, and a rapidly diversifying economy that is no longer solely dependent on the Las Vegas Strip.
Despite these positive factors, the growing risk of a US recession, rising interest rates and challenging FY23 comparisons in the local Las Vegas market make CBRE cautious overall in the near term .
Exploring the group, CBRE recommends Golden Entertainment (NASDAQ: GDEN), which earns a buy rating due to its particularly skewed valuation, underpowered balance sheet, and upside earnings potential for The Strat given the strong schedule of Las Vegas events for FY23 and FY24.
“Additionally, GDEN has unique financial flexibility following the sale of Rocky Gap and could begin returning significant capital to shareholders in the form of share buybacks and dividends, which given the company’s limited capital base, should translate- se in a significant value”.
In addition, CBRE believes the company would be an ideal acquisition target for a larger scale strategic gaming operator.
A $58 price target is set on GDEN for more than 40% upside.
Meanwhile, CBRE initiated coverage on Red Rock Resorts ( RRR ) and Boyd Gaming Corporation ( BYD ) with Hold ratings.
Compare growth, profitability and valuation metrics for GDEN, RRR and BYD.
