Wall Street Bets is a roundup of recent notes from analysts covering the gambling industry.
Fitch generally positive on AGS
Fitch Ratings June 4 assigned a first-time ‘B+’ Issuer Default Rating (IDR) to Bingo Holdings, (also known as PlayAGS, or AGS). “The Rating Outlook is Stable. Additionally, Fitch has assigned a ‘BB-‘ rating with a Recovery Rating of ‘RR3′ for the company’s proposed first lien senior secured debt.
“The ratings reflect AGS’ small yet growing market position in the gaming suppliers’ market, limited geographic and channel diversification, and an expanding digital business. The rating also considers its consistently strong free-cash-flow generation excluding shareholder distributions, moderate leverage profile over the medium term, and solid EBITDA margins.
“The Stable Outlook reflects debt capital market access and a potential to enter new markets and segments, while maintaining its existing longstanding relationships.”
Outlook for VICI and GLPI fairly upbeat
Barry Jonas of Truist Securities wrote June 5 of meeting VICI’s and GLPI’s management teams at the National Association of Real Estate Investment Trusts meeting.
“Both sounded fairly positive despite the difficult deal environment, noting several levers for growth, including gaming (commercial and tribal) and non-gaming transactions. We could see more transactions announced over the next ~12 months- varying from bolt-on to greenfield. While gaming REIT stocks have been mixed year-to-date (Buy-rated VICI up +7% year-to-date, Buy-rated GLPI is down -4%, S&P up +1%), we still favor both REITs given their stability of cashflows/dividends and pipelines.”
New York OSB update
J. P. Morgan’s Estelle Weingrod June 5 looked at online sports betting in New York. “The most recent OSB data released yesterday was for the week ending June 1st,” Weingrod wrote, “recording handle growth of +43% year-over-year, and GGR growth of +113% year-over-year, translating to an implied hold rate of 13.1% (up 429 basis points year-over-year). For Q2 to date (covering the period from March 31 to June 1), OSB handle was up 11% year-over-year, with GGR up 16% year-over-year, thereby resulting in an implied hold rate of 10% (up 45 basis points year-over-year).
Jeffries meets with Boyd, Sportradar
Jefferies’ David Katz reflected on investor meetings with and Boyd Gaming June 3 and Sportradar June 4.
Katz wrote the meeting with Boyd “provided incremental strategic updates on the business, which generally speaking are supportive of our positive view. Management continues to project capital discipline on M&A, internal investments and share repurchases, while maintaining lease-adjusted leverage at ~ 3X. The overall mid-range valuation of 7.6X 2026E EV/EBITDA should bear a greater premium to peers with modest growth, no value catalysts and greater leverage.”
For Sportradar, Katz wrote the outlook was “incrementally bullish. The combination of market rate +500 basis points revenue growth in online sports betting, with the stability of major sports rights deals secure through 2029, with embedded margin expansion, projects long-term confidence. … SRAD remains a top pick within our favored OSB group.”
