Caesars Entertainment and Red Rock Resorts held overlapping second-quarter earnings calls earlier this week, with both companies’ executives talking about Las Vegas, and the reaction from Wall Street couldn’t be more different between the two casino operators.
Caesars, which depends on tourists visiting the Strip, missed consensus estimates and led analysts to reduce their price targets for the stock. Red Rock, which primarily relies on an ever-growing population of local residents visiting its neighborhood casinos but also gets drive-in traffic from those seeking value and an off-Strip experience, reported the highest revenue and adjusted earnings in its 49-year history. Analysts are raising its share price target and encouraging its acquisition.
Red Rock shares closed up 9.1 percent Wednesday at $60.01. Caesars closed down 2.0 percent Wednesday and is down 17 percent for the year. Red Rock, meanwhile, is up nearly 30 percent for the year.
Visitation numbers released Wednesday by the Las Vegas Convention and Visitors Authority that showed a 11% decline in June won’t help with the narrative of a soft summer for Las Vegas tourism. Caesars management even noted that a decline in Canadian visitors, which is 3% to 4% of room bookings, has been a headwind.
Caesars said not to expect any improvement this summer during the third quarter, and that things won’t get better until the final three months of the year to the first half of 2026 when convention bookings are up.
Near-term weakness in Las Vegas has been properly telegraphed, which leaves investors to determine if the fourth quarter of 2025 will be the quarter of growth that Caesars executives expect, according to J.P. Morgan analyst Daniel Politzer. J.P. Morgan’s estimates are under review pending further insight from management, he added.
“Early feedback/sentiment on Caesars is as bad as we can remember,” Politzer said. “We get it; another miss driven by 1-xers is frustrating, and banking on the Las Vega Strip improving in the fourth quarter and first half of 2026 when the booking window is highly compressed requires a leap of faith.”
Politzer said dropped his price target for Caesars by $4 to $44 with the change reflecting a 2% lower 2026 and 2027 adjusted earnings estimate that includes Las Vegas. He said they still consider it a value stock that will generate more than $3 billion in net cash flow in 2027.
“The EBITDA miss versus the Street should draw a negative reaction, although management argues for a stronger second half of 2025, which includes a robust Vegas group calendar and returns on second quarter 2025 regional promotions,” said analyst David Katz with Jefferies Equity Research. “Digital remains the most productive segment, which we expect could reach the $500 million target. Expect capital returns going forward to be balanced by debt paydowns and buybacks through the back half of the year.”
Barry Jonas with Truist Securities said while Caesars missed his estimates for Las Vegas by 1%, Truist remains buy-rated on Caesars based on its digital segment, undemanding valuation and growing free cash flow. He lowered adjusted earnings estimates by 2% through 2027 and lowered the price target by $1 to $37 per share.
John DeCree with CBRE said the second quarter was “noisy, characterized by a sharp slowdown in leisure demand in Las Vegas, numerous one-time headwinds in regionals, and momentum in digital.”
The Strip summer slowdown is weighing on stocks, with Las Vegas adjusted earnings down 8% year-over-year to $469 million, down from a consensus of $480 million, DeCree said.
