Wall Street Bets is a roundup of recent notes from analysts covering the gambling industry.
Churchill Downs prospects
Barry Jonas, analyst for Truist Securities, September 30 commented on a recent visit to Churchill Downs.
“We recently visited several of Churchill Downs Kentucky properties, including the Derby City Gaming & Hotel, Derby City Downtown, and attended Twilight Thursdays racing at the Churchill Downs Racetrack. We were joined by CEO Bill Carstanjen, CFO Marcia Dall and VP of IR Sam Ullrich. Overall, we came away impressed that there is still meaningful upside from organic growth (in our view), including The Rose (modestly delayed, to open in October), future Derby projects, and other historical racing machine growth, along with future mergers & acquisiton optionality. Remain Buy rated.”
Aristocrat/Light & Wonder case
“Aristocrat Technologies granted injunction by Nevada district court judge regarding LNW’s Dragon Train game,” wrote Jefferies analyst David Katz in a September 29 note, “which had been among its most successful launches globally.
“Light & Wonder disagrees and expects to appeal imminently, which would more likely resolve over months. The questions remain for Light & Wonder, given the reiterated 2025 guidance which would be absent of Dragon Train, which management indicates had been the most successful launch in company history. Therefore, what is the make-up of the earnings and therefore the valuation on those earnings? Our impression from Aristocrat management is that its focus is only on Dragon Train, which implies Light & Wonder’s pipeline of other games should remain intact.”
Las Vegas visitation rates
J. P. Morgan analyst Joseph Greff reported on visitor volume in August provided by the Las Vegas Convention and Visitors Authority.
“Visitation for the month was 3.40 million, up 2.4% year over year and coming in 5.0% below August 2019 levels,” Greff wrote in a September 26 note. “Citywide occupancy was 81.2%, down 650 basis points versus August 2019 on a room inventory base that was 1.1% higher than in 2019, reflecting 150,679 open rooms. Convention attendance was 638,300 attendees in August, down 1.4% year-over-year (down 3.0% versus 2019). For the 3Q24 to date, visitor volume was up 0.9% year-over-year (down 4.9% versus 3Q19 to date), while convention attendance was down 3.1% year over year (down 23.1% versus the 3Q19 to date).”
DraftKings’ prospects
Truist Securities’ Jonas also weighed in on DraftKings in a September 26 note. “Despite the bounce in DraftKings since it’s mixed 2Q24 results in August, we like it here and see it as somewhat contrarian and a fresh money idea,” Jonas wrote. “We think the buy-side (based on our conversations) is skeptical on its $900 million to $1.0 billion 2025 EBITDA guidance, which we think has potential to be at the higher end when it’s gives 2025 detailed drivers on its November 3Q24 earnings call (we also don’t see low hold/higher than expected new user investments driving near term estimate risk in the 2H24, unlike last quarter).”
