Wall Street Bets is a roundup of recent notes from analysts covering the gambling industry.
DraftKings looks solid
In a February 17 statement, Truist Securities analyst Barry Jonas wrote that “DraftKings overcame hold-related weakness and posted a solid quarter as its business continues to ramp up.
“With a strong start to 2025, we believe the unchanged EBITDA guide could prove conservative though understand management erring on the side of caution following a tumultuous end to 2024 (NFL). We make slight tweaks to estimates (to midpoint of new revenue guide) with no major changes. Remain Buy-rated and raise price target to $60 (from $50) based on 20x 2026E EBITDA, with DraftKings still the best pure-play for digital gaming.”
In a February 18 release, Fitch Ratings assigned DraftKings a BB+ Long-Term Issuer Default Rating. Additionally, Fitch assigned a BBB- rating with a Recovery Rating of RR1 to the borrowers’ senior secured debt and a BB+/RR4 rating to DraftKings’ senior unsecured convertible notes.
“The BB+ IDR reflects the company’s leading market position in a growing industry, conservative financial structure, and robust free cash flow profile,” read a release. “This is offset by limited diversification and heavy exposure to the volatile online sports betting segment, along with a highly competitive online gaming industry (both igaming and sports betting).”
Wynn receives upgrade
David Katz of Jefferies wrote on February 17 that his firm is upgrading Wynn to Buy from Hold. “In our view, the development of Al Marjan Island and exposure to stable VIP/premium consumers as Macau recovers should be positive catalysts for shares. Furthermore, we expect a sentiment shift to more mid-range valuation levels (11x EBITDA), relative to recent 8-9X, which implies further upside. Additionally, management stated it intends to repurchase shares which is further supportive, in our view. Our new price target is $118.”
Las Vegas room rates down in early March
J. P. Morgan analyst Joseph Greff on February 18 looked at room rates on the Las Vegas Strip for the week of March 9-15.
“For the survey period, relative to the comparable period 2024,” Greff wrote, “midweek rates are -16% and weekend rates are -15% (-16% overall). By company: MGM rates are -23% for the midweek and -19% for the weekend (-21% overall); Caesars rates are -27% for the midweek and +9% for the weekend (-13% overall); Wynn rates are +3% for the midweek and -44% for the weekend (-21% overall); Venetian/Palazzo rates are -2% for the midweek and +29% for the weekend (+9% overall).”
