CBRE has raised its stock-price target for Red Rock Resorts, saying the locals casino market is better positioned through 2026 to handle any economic slowdown than the Las Vegas Strip.
John DeCree, CBRE director of equity research, sent a note to investors Monday recounting meetings last week with Red Rock management at the Durango Casino & Resort in Las Vegas. While media reports and Las Vegas visitation trends have sparked some concern about softness on the Strip, DeCree saw strength in the locals market.
“We continue to view Red Rock Resorts as one of the best investment ideas in the gaming sector for its multi-year growth pipeline and leading position in one of the most compelling gaming markets in the country,” DeCree said. “While investors remain cautious about the Las Vegas Strip, the locals market has shrugged off Strip road bumps. As we discussed in our U.S. Gaming Update from April, the locals market is much better equipped to weather any prospective recession today than in 2007-08 with a more diversified economy and substantially improved supply/demand balance.”
DeCree expects a normal seasonal slowdown this summer, but see no signs of weakness in Red Rock Resort’s core consumer base.
“June can be a good indicator of summer trends, as temperatures begin hitting triple digits and school ends, both of which encourage some seasonal migration,” DeCree said. “However, underlying demand remains healthy.”
Gaming revenue for casinos serving local residents increased 3.2% year-over-year in April and DeCree remains comfortable with their second-quarter EBITDA estimate of $193.5 million for Red Rock Resorts. Their estimate accounts for some construction disruption from various cap-expenditure projects this year, likely peaking in the third quarter.
“Red Rock has a multi-year multifaceted growth strategy that includes the expansion of Durango, targeted reinvestments into core properties, the North Fork development (in northern California), and over 450 acres of developable gaming-entitled land throughout the Las Vegas Valley, most of which are shovel-ready once Red Rock has cleared its plate,” DeCree said. “While other casino peers have large, long-term, development projects, Red Rock has a marathon pipeline that should provide steady predictable annual growth over the next decade.”
Currently, the $180 million phase-two expansion at Durango, upgrades at Sunset Station, and the $200 million room refurbishment at Green Valley Ranch should largely conclude by the end of 2025 and begin generating returns in 2026, DeCree said.
This is followed by the North Fork tribal development opening in mid-2026, with its lucrative management fee stream, DeCree said. Longer-term, management is narrowing down its next major project to a third phase of Durango or greenfield developments on Las Vegas Boulevard south of the South Point Resort & Casino or west Henderson site near the M Resort.
“The company could reveal which project to prioritize in the first quarter of 2026, given the timing of its existing capex program,” DeCree said. “Red Rock is in a unique position where it can fund the majority, if not all, of this planned capex out of operating cash flow, de-risking the growth profile and allowing the company to simultaneously return capital to shareholders.”
Since 2007, the Las Vegas population has increased 30%, while gaming positions in the locals market have contracted a similar amount, resulting in a 46% reduction in gaming positions per 100,000 residents, DeCree said. This is in addition to significantly improved income demographics.
The stock is up about $5 year-to-date and has been trading at just below $50. The 52-week high is $61.73. The low is $35.09.
“We’re maintaining our Buy rating and raising our price target to $57 from $55 for Red Rock Resorts, which is driven by our slightly higher 2026 EBITDA estimate,” DeCree said.
