Wall Street Bets is a roundup of recent notes from analysts covering the gambling industry.
Red Rock Resorts outlook
Truist Securities’ Barry Jonas May 1 examined Red Rock Resorts’ first-quarter report, noting the company “beat our/Street EBITDA by +3%/+2% as its Las Vegas locals-focused properties continue to perform in Q1 and into Q2. Durango continues to grow despite lapping its opening, now generating a 16% net ROI with a Phase II development underway. North Fork construction continues with financing now in place and a mid-2026 completion date still expected with no tariff impact noted. We make some cadence tweaks for seasonality with no major changes to estimates. We remain Hold-rated with a $45 price target as we continue to see best-in-class assets and long-term growth balanced by near-term pressures.”
Positive results for Genius Sports
Josh Nichols of B Riley Associates May 1 examined Genius Sports’ report for the first quarter.
“Our revenue estimate of $144 million is +19.9% year-over-year and nominally above the $143 million consensus,” Nichols wrote. “We also model EBITDA of $21.4 million (14.9% margin) up sharply from $6.9 million (5.7% margin) in 1Q24 and above consensus of $19.7 million. As highlighted in our March 17 transferring coverage note, we believe Genius offers investors pure-play exposure to the foundational infrastructure of sports betting and related media as a ‘picks-and-shovels’ provider without having to pick specific winners in the highly competitive B2C market.”
Caesars Entertainment first-quarter earnings call
After Caesars Entertainment’s first quarter earnings call, Texas Capital’s David Bain stated that the company’s Buy thesis was strengthened.
“Caesars made clear it sees no change in consumer behavior in any of its market segments,” Bain wrote. “Digital EBITDA, academically the highest value EBITDA segment, in our view, was +230% year-over-year, beating consensus estimates by 16%. Regionals have stabilized following capex investments/new competition and should grow this year — Caesars’ regional EBITDA was up for first time in five quarters. Management reiterated it is cash flow harvesting mode (lowering net debt, continued opportunistic buybacks) as its elevated capex cycle is now reduced with the completion of Danville and New Orleans projects. We maintain our Buy rating.”
Churchill Downs viewed favorably
According to a May 5 note by David Katz of Jefferies, Churchill Down’s first-quarter report “remains the most discussed name for the second consecutive week with the reaction to earnings and the Kentucky Derby. Management announced that Derby 151 was down $2-4 million in EBITDA year-over-year due to close in ticket sales, vs. modest growth expectations. Post the commentary on the conference call which suggested softness in regional gaming areas of the business, investors remain focused on the trajectory of growth in the business overall, but mostly the Derby, given the negative growth for the first time in many years. We concur with the consensus view that there is considerable, unique growth potential across the business, with remaining debates over capital allocation and capital structure.”
VICI Properties’ partnership with Red Rock Resorts
Truist Securities’ Jonas looked at VICI Properties recent results May 1. “Notably, VICI announced its first ever partnership with Red Rock Resorts for funding the development of the North Fork casino on tribal land,” Jonas wrote. “While management is still in the ‘learning phase’ regarding potential tribal sale leasebacks, this is VICI’s second investment on tribal land. Reflecting higher guidance, we are raising our 2025E adjusted funds from operations to $2.485 billion (from $2.475 billion) and adjusted funds from operations/share to $2.35 (from $2.34). We reiterate our Buy rating and $38 price target as VICI is the best performing stock in our coverage +8% year-to-date (vs Standard & Poor’s down -4%) with amongst the most secure cash flows/dividend across the space.”
