Wall Street Bets is a roundup of recent notes from analysts covering the gambling industry.
Jefferies analyst David Katz, May 14 on the sale of NeoGames to Aristocrat Gaming: “The deal announcement validates our view that NeoGames, and the digital gaming group in general, is undervalued by the U.S. market at present levels. However, the 129% premium on current levels suggests that much higher prior peaks are unlikely in the near term. Nonetheless, we believe the deal sets a context for other names in our coverage with a clear set of durable capabilities in digital.”
In addition to the sale of NeoGames to Aristocrat, another notable transaction occurred May 14 with Fanatics acquiring Points Bet. Analyst Barry Jonas of Truist Securities wrote that “It was a busy Mother’s Day between this deal (Neo Games/Aristocrat) and Fanatics announcing its agreement to purchase PointsBet’s U.S. operations for $150 million. We and others have suggested more consolidation is coming in gaming; and while these deals have some unique attributes, we do see scope for more M&A for quality assets/earnings streams through valuation multiples for many companies in the group.”
Jonas also weighed in May 15 on Bally’s announcement that it was joining with Gaming & Leisure Properties to build a stadium for the Oakland A’s. “While details are limited,” Jonas wrote, “we see meaningful accretive optionality to Bally’s and landlord GLPI, through either redevelopment of the Tropicana on the remaining 26 acres or a complete sale. While Red Rock Resort’s (Hold) prior deal with the A’s fell apart, we see a greater likelihood here given we believe the economics are more favorable for the A’s (the land essentially free) and lower public funding component. Remain Buy rated on Bally’s/GLPI.”
Reporting on a Las Vegas Strip room rates survey for June 4-10, 2023, J. P. Morgan analyst Joseph Greff May 15 wrote that relative to the comparable period in 2022, “midweek rates are -26% and weekend rates are -34% (-29% overall). By company: MGM rates are +7% for the midweek and -20% for the weekend (-3% overall); Caesar’s rates are -29% for the midweek and -30% for the weekend (-29% overall); Wynn rates are -59% for the midweek and -40% for the weekend (-51% overall); Venetian/Palazzo rates are -55% for the midweek and -64% for the weekend (-59% overall).”
Truist Securities Director Matthew Thornton, wrote in an equity research report about SciPlay’s 2023 first quarter results: “Post SCPL’s better than expected 1Q23 … our 2023 revenue/AEBITDA estimates go to $733 million/$205 million (from $729 million/$204 million), 2024 to $763 million/$221 million (from $759 million/$219million). Maintain Hold.”