J.P. Morgan has increased its price target for Caesars Entertainment to $48 per share ahead of its second-quarter earnings release next week. Caesars stock closed at $29.95 on Tuesday.
Analyst Daniel Politzer issued a note to investors, saying his firm’s EBITDAR forecast of $479 million for Las Vegas is 1% lower than the Street’s $482 million. For Caesars’s regional casinos, Morgan now forecasts $448 million of EBITDAR, down 3% versus their prior $463 million. That primarily reflects one-off headwinds, including flooding and closure of Metropolis in Bossier City, Louisiana, low table hold in Atlantic City, and construction disruption in Lake Tahoe.
For the third quarter, Politzer expects Las Vegas EBITDAR of $430 million, down from $459 million, while regional EBITDAR of 498 million is unchanged.
Morgan’s second-quarter digital EBITDAR of $57 million is slightly above the Street’s $55 million on favorable hold and strong igaming trends. The second-quarter industry igaming revenue accelerated to 33% year-over-year versus a gain of 25% in the first quarter.
Investor focus points will likely include the health of the regional customer, recently improving gaming-revenue trends, the regional promotional environment, and avenues to maintain margins, Politizer said.
“For Las Vegas, the forward outlook will be in focus, especially for the third quarter where trends appear weak as well as the fourth quarter and first half of 2026 where group/convention business could drive growth,” Politzer said. “Digital remains a bright spot, but Caesars does not appear to be getting much or any credit for its digital business.”
Politzer said Caesars will continue to strike a balance between debt paydown and share repo and that shareholders are divided on the best use of cash.
J.P. Morgan’s expectation is Caesars will generate 50%+ of its market cap in net cash flow by the end of 2027.
“We like Caesars for its material net free cash flow generation (50%+ of market cap) through 2027, which should accrete to shareholders via debt reduction and/or capital returns; heavily discounted valuation – even ascribing zero value to Caesar’s OpCo assets, we arrive at a fair value in the mid-$40s; and Caesars’ Digital has been a bright spot, achieving meaningful profitability,” Politzer said. “Our $48 price target is based on 2027 EBITDAR multiples of 8x Las Vegas, 6.5x regionals, 8.0x Digital, and 6.5x Managed & Other.”
