Wall Street Bets: Analysts take on VICI, Las Vegas Strip room rates, Churchill Downs

February 26, 2024 1:57 PM
Photo: CDC Gaming Reports
  • Rege Behe, CDC Gaming Reports
February 26, 2024 1:57 PM
  • Rege Behe, CDC Gaming Reports

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

VICI Properties

Analyst David Katz of Jefferies examined VICI Properties’ 4Q23 results Feb. 22, writing that the company’s revenue was “$931.9 million, above our $926.7 million and consensus’ $917.9 million. The company generated $749.6 million of adjusted EBITDA, which is in line with our $747.9 million and the Street’s $750.8 million. Adjusted funds from operations/share of $0.55 was above our $0.54 and in line with Street’s $0.55. Given the fixed nature of the revenues, there should be little variability in results vs. expectations.

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Truist Securities analyst Barry Jonas also examined VICI’s results.  “Gaming portfolio quality emphasized, though M&A environment remains somewhat muted,” Jonas wrote in a Feb. 23 note. “Management again noted the strength of its diversified gaming portfolio, with the Vegas event calendar and new attractions (including the MSG Sphere) driving performance. Management did note that capital market presented some N.T. visibility challenges, though its relationships would continue to provide accretive deal opportunities. Management noted it would take a wait-and-see approach before calling the Caesars (Buy) Centaur assets and would not call the real estate if the transaction proved dilutive on prevailing costs of capital. That said, we continue to believe REIT financing could present competitively against traditional bank financing.”

Las Vegas Strip room rates

J. P. Morgan’s Joseph Greff issued a note Feb. 26 about Las Vegas Strip room rates between March 17, 2024 and March 23, 2024. “For the survey period, relative to the comparable period 2023, midweek rates are +14% and weekend rates are -17% (-1% overall),” Greff wrote. “By company: MGM rates are +10% for the midweek and -16% for the weekend (-2% overall); Caesars rates are +23% for the midweek and -8% for the weekend (+6% overall); Wynn Resorts rates are +3% for the midweek and -39% for the weekend (-19% overall); Venetian/Palazzo rates are +17% for the midweek and +1% for the weekend (+10% overall).

Churchill Downs

Churchill Downs’ 4Q results also drew interest from analysts. Truist Securities’ Jonas Feb. 22 wrote that “Churchill Downs posted a solid Q4 +8% beat, though shares were surprisingly up just modestly today. We adjust ‘24E EBITDA down -1% on well-known bad January weather and the cadence of new build timing/ramp. We keep 2025E largely unchanged and see multiple growth drivers offsetting N.T. and largely transitory weather-related impacts. Maintain Buy and our $140 PT.

Katz of Jefferies also looked at Churchill Downs, writing Feb. 22 that “Strategic capital investment projects remain the main driver of Churchill Down’s future expected earnings growth with the longer-term capital dynamics and leverage trajectory at the heart of the matter. Despite elevated leverage form capex in the short term, we remain confident the company should continue to execute, resulting in gradual deleveraging which could provide upside to the shares. Reiterate Buy.”