According to J.P. Morgan analyst Daniel Politzer, August was a grim month for gaming stocks. The sector traded seven percent down, while the Standard & Poor 500 was up three percent on average.
This was the worst August for gaming stocks since 2019 and Politzer called it “rough.” He cited several possible causes, including “summer doldrums/low liquidity, the Iran conflict dragging, macro/higher rates, and sector uncertainty keeping investors sidelined.”
With gaming expos heating up this month, Politzer turned his focus to regional-gaming stocks. These, he said, were of the greatest interest “with stable fundamentals seemingly disconnected from recent underperformance.” The analyst cited Boyd Gaming, Churchill Downs, Station Casinos, and Penn Entertainment.
“For our gaming coverage more broadly, the waiting is the hardest part,” wrote Politzer. He felt sector sentiment would improve when the future of MGM Resorts International was resolved. The company is awaiting the outcome of a takeover bid by Barry Diller.
Other potential catalysts cited by Politzer were casino divestitures by Churchill Downs and movement of the prediction-market issue before the Supreme Court. Also, an end to the present Persian Gulf war could, he offered, make for a clearer horizon for Wynn Al Marjan.
Thanks to share buybacks, Churchill Downs was outperforming the gaming group, up three percent in August. Politzer contrasted this to a 17 percent plunge in Penn stock, an 11 point drop in Station, and an eight percent declivity in Boyd shares.
“We recognize higher rates and geopolitical tensions don’t help, and there could be some reluctance to buy [year-to-date] losers ahead of tax-loss harvesting,” Politzer wrote. But he noted that regional gambling revenues were up as much as six percent in July, driven by a nine percent spike at Penn properties. August was just two percent higher regionally at casinos, but Politzer noted the lack of one weekend day and of the Labor Day holiday, which was observed September 7.
Turning his focus to individual companies, Politzer observed that Penn was outdoing the competition in its strongest facet, regional casinos. He noted that the company had just raised its earnings guidance for the third and fourth quarters of 2026, hinting at a six percent boost in cash flow.
New hotels in Columbus and a new tower at M Resort in Las Vegas were credited with spurring business, as were totally new casinos in Aurora and Joliet, Illinois. Politzer allowed that Penn might be “hungry for an acquisition,” but felt that the company was primarily focused on shoring up its balance sheet and reinvesting in core properties. One thus cited was Boomtown New Orleans, slated for an onshore relocation and upgrade.
Observing that Boyd stock had plunged from $91 per share in late July to a year-worst $76 on September 1, Politzer acknowledged a bear-market case for the stock. He observed, “There’s fear it’s bound to make an acquisition sooner or later, given its low leverage, mature state of regional gaming, and opportunity for synergies.”
However, Politzer praised Boyd as a canny operator that exited FanDuel when that stock was riding high. He added, “Depending on the asset/price, an acquisition could make sense.” Even so, bear-market investors regarded Boyd as “a mature company that can’t seem to grow.” Politzer thought this a just verdict, given that Boyd was coming off four years of flat cash flow.
Boyd arch rival Station was described as having the best 2027 outlook in the sector. Although Station shares dove in August, Politzer contended that the company’s $181 million cash-flow target for the third quarter could be realized.
Another tailwind was a turnover of Station from a company disrupted by construction to one that would be harvesting returns on investment from those same projects. He also believed that Station might soon announce a new resort project, either Cactus Lane or Inspirada. Finally, management fees from the oncoming North Fork Mono tribal casino in California would further boost cash flow.
Between restarting stock buybacks and appearing able to offload at least one regional casino, Churchill Downs outperformed the group, its shares up in August. Still, shares suffered a severe drop across 2026 to date and investors, Politzer related, were perceiving the stock as “a value trap.”
“In a sea of beaten down gaming stocks,” Politzer responded, “valuation alone is not a differentiator, but Churchill Downs does have a potential catalyst via its regional asset sales, and its recently launched Thoroughbred Championship Series could be a preview of the company’s strategic pivot to having a broader ‘experiential’ offering.”
Politzer put a rating of Overweight on Churchill Downs and a price target of $123 per share. For Penn, he was also Overweight, with a $27 price goal. Boyd got the lone Neutral rating, its price target being $93 a share. Station was also Overweight with a view towards a share price of $72 apiece.
