Wall Street Bets: Analysts’ takes on Caesars, REITs, Aristocrat, Gambling.com

January 16, 2024 1:32 PM
Photo: CDC Gaming Reports
  • Rege Behe, CDC Gaming Reports
January 16, 2024 1:32 PM
  • Rege Behe, CDC Gaming Reports

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

Caesars

CBRE analyst John DeCree, in a Jan. 16 note, wrote “We are maintaining our Buy rating on the shares of Caesars, but lowering our price target to $67 (from $73). Our new price target implies a 9.1x multiple of FY25 EBITDA estimate of $2.746 billion and 8.7x our FY25 estimate of $4.099 billion. Our FY25 discretionary free cash flow estimate of $6.69 per share represents a 10% yield on our updated target price.”

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REIT sector

In a Jan. 15 note, Truist Securities analyst Ki Bin Kim wrote that the company is “relatively bullish on REIT sector, following a challenging 2023 that was mired by volatile inflationary environment (MSCI US REIT +14% vs. Standard & Poor 500 +26%). REITs should benefit from a favorable backdrop of improved cost of capital environment, liquidity and attractive valuation levels. We project 3.3% (closer to 4.5% if excluding Prologis’ promote income impact) and 6.7% average funds from operations/share growth for REITs coverage universe in 2024 and 2025 respectively, with a 3.9% dividend yield and relatively constructive view on multiple expansion for total return of 10-15%.”

Aristocrat Leisure Limited

Fitch Ratings in a Jan. 11 note “affirmed the Long-Term Issuer Default Ratings (IDRs) of Aristocrat Leisure Limited (parent and guarantor), and co-borrowers Aristocrat Technologies Australia Pty Limited and Aristocrat Technologies, Inc. at ‘BBB-‘. Fitch has also affirmed ALL’s senior secured debt ratings at ‘BBB-‘. The Rating Outlook has been revised to Positive from Stable.

The affirmation reflects Aristocrat’s strong business profile as a global gaming supplier and low gross leverage. The company is expected to continue to manage its balance sheet conservatively, while concurrently investing in its existing portfolio, returning capital to shareholders through dividends and opportunistic buybacks, and pursuing potential acquisitions.”

Gambling.com

According to Jefferies analyst David Katz in a Jan. 16 statement, the company recently hosted investor meetings with Gambling.com. Katz wrote that the outcome was “generally bullish with the highest investor interest since IPO and illustrative of its long-term positioning within the global digital gaming markets. The most notable commentary was that management believes its positioning improves as markets mature, which we believe is counter to the Street’s view. Gambling.com remains a long-term beneficiary of U.S. and global proliferation and growth in digital gaming.”