Deutsche Bank analyst Carlo Santarelli downgraded the rating on Boyd Gaming (BYD – Research Report) to a Hold today, setting a price target of $71.00.
Carlo Santarelli has given his Hold rating due to a combination of factors including Boyd Gaming’s recent performance and market conditions. After a period of outperformance, the company’s shares are now facing a challenging environment without clear short-term catalysts that could drive growth or a re-rating. The Las Vegas locals’ market is showing signs of slowing, regional gaming markets are declining year over year, and increasing costs are leading to difficulties in achieving EBITDA growth. This situation is compounded by the historical rarity of multiple re-ratings in the face of declining EBITDAR within the gaming industry.
Despite some encouraging signs in core customer volumes and margins in the months following a particularly difficult January, there is not enough evidence to support a strong conviction in consumer re-acceleration in drive-to gaming markets in the near term. Moreover, the Las Vegas locals’ market, which is a significant component of Boyd Gaming’s operations, is experiencing top line headwinds and competition from nearby properties. The opening of Durango has added revenue, but it has also created indirect competition that affects the company’s overall performance. Additionally, there was an unexpected sequential weakness in the Midwest and South segment margins, which contributed to Santarelli’s decision to downgrade the stock to Hold.
Santarelli covers the Consumer Cyclical sector, focusing on stocks such as Caesars Entertainment, Boyd Gaming, and MGM Resorts. According to TipRanks, Santarelli has an average return of 19.4% and a 59.84% success rate on recommended stocks.
In another report released on April 19, Barclays also maintained a Hold rating on the stock with a $70.00 price target.
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Boyd Gaming (BYD) Company Description:
Boyd Gaming Corp. engages in the management and operation of gaming and entertainment properties. It operates through the following segments: Las Vegas Locals, Downtown Las Vegas; and Midwest and South. The Las Vegas Locals segment consists of casinons that serve the resident population of the Las Vegas metropolitan area. The Downtown Las Vegas segment comprises of the following casinos: California Hotel and Casino, Fremont Hotel and Casino, and Main Street Station Casino, Brewery and Hotel. The Midwest &and South segment operates land-based casinos, dockside riverboat casinos, racinos, and barge-based casinos in the Midwest and southern United States. Its portfolio includes hotels, casino, breweries, resorts, and spa. The company was founded by William Samuel Boyd and Sam Boyd on January 1, 1975 and is headquartered in Las Vegas, NV.
