Citing “better than previously modeled” casino revenues from the regional circuit, J.P. Morgan senior analyst Joseph Greff raised his revenue projection for Boyd Gaming. He now expects $440 million, instead of the previously anticipated $414 million from the Midwest, South, and West regions.
Greff also modeled $14 million in online-derived revenue and another $15 million from tribal-management contracts, such as the hugely successful Sky River Casino near Sacramento. He kept his expectations for downtown Las Vegas and locals Vegas casinos “undemanding … nor have we changed our 2Q23-through-2024 estimates and still see a relatively healthy and stable gaming consumer, with the only legitimate nit being the state of the low-end consumer.” He noted that the latter has been largely disregarded by the casino industry coming out of COVID.
The analyst continued to like Boyd’s free-cash-flow generation, which he pegged at 10 percent of current share prices. He called Boyd’s stock price “reasonably attractive,” given that it owns almost all of its own real estate, as well as for its position in Las Vegas’ non-Strip market. Greff called the Vegas locals sector “effectively a duopolistic market with a relatively better demand environment.” He also applauded a “sturdy and lowly leveraged balance sheet,” along with Boyd’s regular stock buybacks.
Standing firm on his $75-per-share price target (Boyd is currently trading at $65.29 a share), Greff concluded, “While we continue to see BYD’s share price (as well as the rest of our coverage universe’s) trading more on macro trends (versus company-specific ones) in the near term, we see BYD as (at least) a relative outperformer within our U.S. gaming universe.”
