Wall Street Bets is a roundup of recent notes from analysts covering the gambling industry.
J.P. Morgan’s Dan Politzer on May 29 was one of the many analysts examining the sale of Caesars to Fertitta Entertainment:
“After months of anticipation, Caesars announced that it’s being acquired by Fertitta Entertainment for $31/share, implying a total deal value of $17.6 billion. Similarly, we are moving to Neutral and reducing our price target to the $31 takeout price (-$4), which implies a 2027E multiple of 7.1x EV/EBITDAR and free-cash-flow yield of 15.5%. No dispositions were announced, but we would not be surprised to see some properties shake free, with overlapping markets including Atlantic City, Reno/Lake Tahoe, Laughlin, and Las Vegas. The $31/share was at the lower end of our $31-$35 expected range, but the agreement includes a ‘go-shop’ period through July 11, where Caesars can consider other offers. With a plethora of needed approvals, it could take up to 12 months for the deal to close, though no timeframe was given.”
Barry Jonas of Truist Securities on May 28 also weighed in on Caesars:
“After months (and years) of M&A speculation, Fertitta Entertainment announced an agreement to acquire Caesars for $31/share. Lower than media speculation of $32-34, the deal implies a 6.6x 2027E EBITDAR multiple and 8% upside from yesterday’s close (but 49% premium from February 25, 2026, before the deal was leaked). We expect a lengthy ~12 month closing period, and see positive ramifications across the sector – specifically for MGM, which we upgraded yesterday. We adjust our price target to $31 (from $32) to reflect the deal price and DG to Hold.
David Bain of Texas Capital Securities on June 1 also examined Caesars:
“We downgrade Caesars to Hold following its announcement it has entered into a definitive agreement to be acquired by Fertitta Entertainment, Inc. for $31 per share in cash. The agreement implies a valuation of ~7x CY27E EV/EBITDA, which we believe vastly undervalues Caesars’ cash flow, irreplaceable (Las Vegas) Strip assets (60% Las Vegas EBITDA property company derived), best-in-class/vast marketing network and digital business. However, we believe it is relatively unlikely other suitors step up for all of Caesars (total deal value of $17.6 billion), and more likely certain operators are opportunistically bidding for individual Caesars assets/property sales as part of a larger conclusion to a transaction.”
Barry Jonas of Truist Securities looked at April on the Las Vegas Strip:
“April Las Vegas Strip GGR rose +7% year-over-year, with normalized win (+1%) and ex-baccarat (+5%) also healthy while visitation metrics were flattish. Locals GGR was flat year-over-year, though normalized win was strong. We note the month did not have any calendar or slot accounting impact. Between our Vegas consumer perceptions survey, our Vegas room rate survey, our recent MGM upgrade and CZR takeover/downgrade, it’s been a wild week on the Strip. We think today’s results were better than expected as we believe Q2 could be a potential inflection point for the Strip.”
