Wall Street Bets is a roundup of recent notes from analysts covering the gambling industry.
In an April 17 note, J. P. Morgan analyst Joseph Greff wrote that he was reaffirming the company’s overweight rating for Boyd, given its attractive free cash flow generation; real estate ownership; sturdy and lowly levered balance sheet; Las Vegas locals exposure; and a valuation that looks undemanding.
“We have not changed our (undemanding) forecasts for Boyd’s Las Vegas locals/Downtown Las Vegas segments, nor have we changed our 2Q23 through 2024 estimates and still see a relatively healthy and stable gaming consumer,” Greff wrote, “with the only legitimate nit being the state of the low-end consumer (which, for the most part, the U.S. gaming operators have been less focused on coming out of COVID).
“We continue to like Boyd’s free cash flow generation, with its current share price implying a 10% free cash flow yield on our 2024 estimates.”
Jeffries equity analyst David Katz, in a note released April 16, wrote he was reiterating buy for DraftKings.
“Noticeably stronger interest in digital gaming draws particular focus to DraftKings as well as its peers,” Katz wrote. “We expect the forthcoming quarterly report should be notably important as the company progresses toward profitability in 4Q23. We have revisited our model ahead of earnings to adjust 2023 cadence, with FY23 and FY24 primarily as prior. We remain bullish on DraftKings and reiterate our Buy.”
C. Patrick Scholes, analyst for Truist Securities, noted that, as expected, demand for lodging ebbed prior to the recent holidays.
“Just as the prior week’s results reflected a positive demand impact from the pull-forward of business travel in advance of the April holidays, last week’s results reflected a harder comp given Passover-Good Friday-Easter weekend in the 2023 results,” Scholes wrote. “Group occupancy was light, as expected. Next week will be an easier comp.
“As a brief refresher on the impact of holiday calendar shifts to weekly lodging results, the timing of the spring holidays significantly impact travel patterns where business travel is light during holiday weeks and more robust in the weeks prior to and after the holidays. We strongly discourage looking at last week’s data versus prior weeks as an indicator of softening travel trends.”
