Wall Street Bets: Analysts take on GLPI, Churchill Downs, Boyd Gaming

April 29, 2024 1:45 PM
Photo: CDC Gaming Reports
  • Rege Behe, CDC Gaming Reports
April 29, 2024 1:45 PM

Wall Street Bets is a roundup of recent notes from analysts covering the gambling industry.

The start of 1Q24 reports last week resulted in numerous reports and statements from Wall Street analysts.

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Gaming and Leisure Properties Inc

J.P. Morgan analyst Joseph Greff, in an April 26 note about Gaming and Leisure Properties Inc., wrote that following the company’s 1Q24 results, “we leave our 2024 and 2025 full-year estimates largely unchanged. For 2024, we model $1.35 billion of EBITDA, $1.05 billion of adjusted funds from operations (AFFO), and $3.74 AFFO per share. For 2025, we model $1.37 billion of EBITDA, $1.07 billion of AFFO, and $3.81 AFFO/Share.

“We maintain our Neutral rating and like the steady annuity-like rent streams and GLPI’s ability to source and augment growth with tuck-in acquisitions (like the recent Tioga acquisition). We see the current trading multiple at ~14x EV/EBITDA as in the realm of fair value but acknowledge that dedicated real estate and income investors could be attracted to its current 7.0% annualized dividend yield.”

Barry Jonas of Truist Securities, also in an April 26 note, wrote that “GLPI Q1 AFFO/share was in-line while 2024 AFFO/share guide was raised at the low end. Management noted an active mergers and acquisitions landscape despite an uncertain rate environment, and we think GLPI’s strong tenant relationships will continue to provide further growth avenues. We make modest tweaks to our model with 2024E AFFO/share ($3.73/share) at the mid-point of $3.71-3.74 guide, with potential upside if rates improve or significant M&A is announced. While shares have underperformed year-to-date as rate uncertainty increased, we continue to favor the relative safety of GLPI and gaming REITs. Maintain Buy and $59 price target.”

Boyd Gaming and Churchill Downs

Analyst David Katz of Jefferies compared the 1Q24 results of Boyd Gaming and Churchill Downs asthe tale of two cities. Boyd and Churchill Downs reported this past week providing a good perspective on recent trends in Las Vegas Locals, regional gaming, and digital gaming. Churchill Downs delivered strong results in regional gaming with a strong Kentucky Derby coming up, while Boyd’s results came in softer-than-expected due to January weather conditions in the Midwest and South. Meanwhile, competitive market pressures in Las Vegas Locals, and lower Downtown Las Vegas results were driven by HI travel volumes. The key question from investors heading into this week’s earnings is if Boyd’s weakness is specific to that or indicative of a broader fundamental slowdown with Caesars and Penn earnings coming up.”

Barry Jonas of Truist Securities April 25 weighed in on both Boyd and Churchill Downs.

Jonas wrote that Boyd reported “a -5%/-4% EBITDA miss to our/Street estimates with weakness across the main land-based segments on the topline, but worse on the margin. Locals are seeing a continuing negative ripple effect from Durango Casino & Resort’s opening (December 2023), as smaller players have ramped up promos.

“Downtown and Midwest & South have seen improvement into Q2 after a slower start to the year. We still like Boyd for low leverage, real estate ownership, continued capital returns, and its 5% FanDuel ownership – though the Q1 print will likely translate to weak stock performance tomorrow. We lower 2024E/25E EBITDAR by -4%/-3% and our price targe moves to $75 (from $80).”

Jonas also wrote, “Churchill Downs posted a strong Q1 +9% beat, with shares meaningfully outperforming today. We flow through the beat (+2% ’24 EBITDA) and make modest tweaks to our model. We continue to see the existing portfolio generating ~$1.4B EBITDA once fully open/ramped by ~2025/26, with potential upside from Historical Racing Machines (HRM) in Virginia/Kentucky/New Hampshire further enhanced by Exacta optimizations. We expect the 150th Kentucky Derby to be the strongest in the company’s history, and see continued growth ahead for the company’s well-positioned assets. Reiterate Buy and raise our price target to $145 from $140 PT.”