Wall Street Bets is a roundup of recent notes from analysts covering the gambling industry.
Golden Entertainment prospects
B Riley Securities analyst David Bain commented on Golden Entertainment, writing that “Following a relatively in-line 2Q24 EBITDA (-$600k versus consensus estimates), we reduce calendar year 24E/calendar year 25E EBITDA 5%–2%. Changes primarily reflect forward room renovation disruption at Golden’s Arizona Charlies Decatur property and lesser initial Atomic Golf contribution to its Strat resort and casino. We view our model changes as likely overly conservative. However, adjustments result Golden trading for 5.9x calendar year 25E EV/EBITDA valuation, or ~2.5x turns below peer averages.”
“Golden Q2 EBITDA beat our estimate by +3% on corporate, though missed the Street by -2%,” wrote Truist Securities analyst Barry Jonas. “We still see some challenges in property ramps, as well as softness from the low-end consumer. Despite these challenges, we remain Buy-rated as we see Golden well-positioned with undemanding valuation with a strong balance sheet (sub-2.0x net leverage) primed for increasing capital returns, as well as significant real estate optionality. Reflecting current conditions and some conservatism, we lower 2024E/25E EBITDA by -3%/-2%, and we lower our price target to $38 price target (from $40).”
Penn Entertainment results
Jefferies analyst David Katz looked at Penn Entertainment’s results, writing
“A narrower than expected loss in the interactive segment highlighted the quarter’s performance, which should provide modest upside to shares in the near-term. Looking forward, we believe the direction of the stock will be heavily dependent on the success of ESPN Bet as the ’24 football season approaches, given the outsized capital allocated and near-term losses incurred to develop the digital business. Reiterate Hold.
Following Q2’s beat, Penn maintained land-based guidance and improved interactive losses,” wrote Truist’s Jonas. “Following our recent upgrade, we reiterate that better days seem to be ahead for Penn given its vision for interactive is approaching reality with real unrecognized value outside of ESPN Bet. … We take our model up +1% for 2024E (factoring new interactive guide) with 2025E unchanged. Our price target remains at $25 and we reiterate our Buy rating.
DraftKings surcharge
Jefferies’ Katz, in his weekly summary of stocks, looked at DraftKings surcharge and how it will affect its parent company, Flutter. Katz wrote that “Investors continue to focus on the set-up for OSB-exposed names, namely DraftKings, and Flutter and the surcharge debate, with Flutter earnings forthcoming on Tuesday and the question of what management might indicate on the surcharge matter. We expect a “wait-and-see” comment.”
