Wall Street Bets is a roundup of recent notes from analysts covering the gambling industry.
DraftKings, Flutter/FanDuel
According to Jefferies analyst David Katz in a July 7 note, the dynamics surrounding Flutter/FanDuel and DraftKings have been “the most active topic in our coverage.
“The most recent trends in the critical, still rapidly-growing New York market suggest that Flutter/FanDuel is maintaining a significant lead in market share in GGR at 47% vs. 36% for DraftKings, despite DraftKings generating higher growth at 45% vs. Flutter’s 27%. Finally, the generally rational promo environment and solid margin outcomes support a positive view on the shares of both companies. … Broadly speaking, the investor perspective appears more bullish on Flutter, given the positive data point outcomes, although coupled with the downward estimate revisions for DraftKings on the Golden Nugget Online Gaming migration. We note that both should be seeing estimate resetting post the Illinois tax increase going forward, which we believe should be well understood. These remain top idea stocks in our total coverage … and our favorite category for the remainder of 2024.”
REIT stocks
In a July 3 note, Truist Securities analyst Barry Jonas examined gaming real estate investment trust stocks.
“Given the interest rate environment and its impact on deal flow, triple net Gaming REIT stocks have underperformed year-to-date,” Jonas wrote. “At the same time, both VICI and Gaming & Leisure Properties Inc. have not stood still, with both demonstrating execution ability despite the lingering interest rate uncertainty. GLPI’s purchase of three Strategic Gaming Management’s (private) assets last May for $105 million (at an 8.4% cap rate) was indicative of smaller deals that are still getting done despite the lack of rate cuts so far this year.
“To its credit, VICI did a $1 billion deal with Venetian (Apollo) with its Partner Property Growth fund in April for property projects/improvements. Additionally, both GLPI and VICI have made incremental construction loans available, which could provide further accretive M&A opportunities in the future.”
Las Vegas Strip room rates
J.P. Morgan analyst Joseph Greff reported on Las Vegas Strip room rates for the week of July 28-August 3 in a July 8 note.
“Relative to the comparable period 2023, midweek rates are +27% and weekend rates are -7% (+9% overall),” Greff wrote. “By company: MGM rates are +21% for the midweek and -15% for the weekend (+2% overall); Caesars’ rates are +45% for the midweek and +1% for the weekend (+20% overall); Wynn Resorts rates are +20% for the midweek and +6% for the weekend (+12% overall); Venetian/Palazzo rates are +22% for the midweek and +30% for the weekend (+26% overall).”
