Wall Street Bets is a roundup of recent notes from analysts covering the gambling industry.
Penn Entertainment
In a Jan. 19 note on Penn Entertainment, J. P. Morgan’s Joseph Greff wrote that “We are lowering our 4Q23 land-based casino EBITDAR estimates for slightly lower than previously modeled regional GGR as well as increasing our forecasted digital losses due to greater promotional activity since its November 14th ESPN BET Launch. Specifically, our 4Q23 EBITDA estimate goes to $258 million, from $315 million, and sits below the Street’s $290 million.”
International Game Technology
On Jan. 19, Fitch Ratings affirmed the long-term issuer default ratings (IDRs) of International Game Technology (IGT) and IGT Lottery Holdings B.V. (IGTBV) at ‘BB+’. Fitch also affirmed IGT’s senior secured debt at ‘BBB-‘/’RR2’. “The ‘RR2’ for IGT’s secured debt reflects its designation as a Category 2 first lien under Fitch’s recovery criteria, given the instruments are issued by non-US based borrower. The rating outlook is Stable.
“The rating reflects IGT’s conservative leverage profile, robust profitability, and solid liquidity, while also considering its leading share in core gaming end markets, specifically lottery. The strong credit profile positions IGT favorably to continue funding slot machine development, shareholder returns, and absorb potential future cash demands related to lottery concessions.”
Caesars Entertainment
Truist Securities analyst Barry Jonas Jan. 18 wrote about Caesars Entertainment’s preliminary 2024 fourth-quarter results “tied to a debt refinancing deal (similar to last year). Pre-announced results are only modestly below our recently lowered estimates; with Vegas below, regionals ahead and digital inline. As we discussed last week in our 2024 Year Ahead (with Caesars listed as a 2024 favorite), we think the softer Q4 results should be well understood by the Street with the focus more on a potentially improving capital markets/refinancing environment. Reiterate Buy rating.”
Jefferies analyst David Katz also discussed Caesars’ preannouncement. In a Jan. 18 statement, Katz wrote that Caesars’ announcement “in conjunction with the tender highlight the volatility in both Las Vegas and digital gaming for Caesars, as it progresses toward higher productivity and cash flow levels, and therefore higher equity levels. We view the surprising impact of construction disruption a notable modest negative, as compared to hold and weather volatility that are reflected in our updated model. We expect a generally positive 2024 for Caesars and reiterate our Buy.”
