A Wall Street analyst Sunday listed Churchill Downs as a market outperform with a $149 price target after an all-time record for Kentucky Derby week handle. The stock closed at $98.65 on Friday.
Jordan Bender with Citizens Bank Equities said the Kentucky Derby historically accounts for 25% to 30% of the full-year adjusted earnings for Churchill Downs, although it now represents about 14% of Citizens’s 2026 property-level EBITDA, due to the emergence and growth of the historical racing machine segment.
“We believe ticket pricing and demand were decent, based on commentary from the company’s April 23 earnings call,” Bender said. “Median ticket prices, excluding general admission and suites, ended at about $2,100, with the premium tickets serving as the largest revenue contributor for the day. Tickets account for about 60% of Derby week revenue.”
Wagering during the week, accounting for about 25% of total revenue, remains the final piece of the puzzle, Bender said in a note to investors.
“Wagering achieved an all-time record for all-source handle for the Derby, increasing 3% to $487 million, and a record for TwinSpires handle, increasing 6%,” Bender said. “That said, all-source wagering declined 3% and all-source wagering on the race declined 4%. This year for the first time, the Kentucky Oaks (on Friday) aired during prime time on NBC and Peacock, which acted as a tailwind for overall wagering trends, with the Oaks race +29% year-over-year and the day of +18% year-over-year.”
Overall, EBITDA is expected to increase to $15 million to $18 million versus original expectations of $15 million to $20 million compared to a decline of $2 million to $4 million last year and a $27 million increase in 2024 during the 150th Derby, Bender said.
“The NBC deal was renewed this year and contributed to a step-up in payments of roughly $10 million, implying same-store growth of $6.5 million, up 4% year-over-year, partially benefiting from poor weather in the prior year,” Bender said. “We note FanDuel had technical difficulties throughout Derby Day and Great White’s last-minute scratch, the longest odds to win the Derby, had a negative impact on wagering, which we believe was the delta between actual results and exceeding the midpoint of the original range.”
Bender said “a perfect storm” of negative factors impacted last year’s Derby, including macro headwinds like Liberation Day, poor weather, and Churchill Downs not increasing pricing across several ticket tiers following strong pricing for the 150th race.
As a result, EBITDA declined, raising concerns about management’s ability to sustain pricing power and growth in tougher conditions, Bender said.
The stock fell 16% following first-quarter 2025 earnings, when the company guided to flat growth and later underperforming, leading to a multiple re-rating for its highest-multiple segment, Bender said.
“That said, EBITDA returning this year, generating a more normalized outcome nearly a year later, should serve as a clearing event for the stock and help restore investor confidence in our view.”
Historically, median stock performance in the 60 days following the Kentucky Derby is +4% (2011–2025), compared to +1% for the Russell 3000 over the same period.
Looking ahead, the 2027 event will not feature a major showcase growth project, with Victory Run ($290 million) opening for the 2028 Derby, Bender said.
“We maintain our view that Churchill Downs is the most diversified and one of the most attractive ways to gain exposure to the brick-and-mortar gaming space. We believe the dissipation of several overhangs, including igaming and new casino legislation in Virginia, represents an attractive buying opportunity.”
